Zebu blog

Tag: market analysis

  • How to Read Pre-Market Trends (Without Becoming Paranoid)

    Every morning, the Indian market opens with a mix of data and emotion. It’s not just numbers—it’s expectations shaped by what happened in New York, Singapore, or even in Brent crude futures while we were asleep. For many investors, the time between 8:30 and 9:15 is the noisiest part of the day.


    Especially on weeks like this one, where Nifty hovers near record highs, global cues feel shaky, and a couple of heavyweight stocks are due to report earnings. We’ve seen this across Zebu users: a rise in logins before 9 AM, mostly to check SGX Nifty, U.S. closes, and WhatsApp alerts. And while the instinct to “stay ahead” is understandable, it can often lead to stress that’s… unnecessary.

    Here’s a better way to look at pre-market signals. Not as warnings, but as reference points—calmly interpreted, with intention.

    What’s Actually Moving Before 9:15 This Week?

    Let’s look at the headlines that shaped Tuesday’s close:

    • Sensex and Nifty were steady above 77,000 and 23,400 respectively
    • Banking and power stocks gained, while FMCG paused
    • Crude oil prices rose slightly overnight, renewing concern over inflation-sensitive sectors
    • SGX Nifty pointed to a flat-to-negative open amid global rate jitters

    So what does this mean for your screen on Wednesday morning?

    Mostly: not much… unless you overreact to it.

    SGX Nifty: Not a Mirror, Just a Mood

    SGX Nifty is often the first thing Indian investors check. It gives a sense of where Nifty might open. But it’s not predictive—it’s just reflective of overnight sentiment, traded offshore. Today, if SGX Nifty drops 60 points, and Nifty opens down 30 and recovers quickly, that’s normal. Indian markets often adjust based on local flows and institutional action post-9:30. So glance at SGX, sure. But don’t trade because of it.

    US Markets vs. Indian Fundamentals

    Dow Jones down 0.5%, Nasdaq slips 80 points. That’s a headline. But is it a reason to exit your Hindustan Unilever position?

    Not always. Right now, Indian domestic flows are holding up well. Mutual fund SIPs, retail delivery volume, and resilient demand for PSU stocks have created a buffer. Unless the global drop is tied directly to oil, rates, or currency moves, Indian stocks may react mildly—or not at all.


    Zebu users checking U.S. closings on their dashboard should pair that with FII/DII flow summaries. Context > drama.

    Company Earnings: The One Pre-Market Cue That Matters

    This week, a few large-cap stocks are announcing results. If you hold or plan to buy any of them, pre-market action might be sharp. If the earnings beat estimates, the stock could gap up at open. But will it hold that move? Only if volumes confirm. If results disappoint, a gap down is common. But that doesn’t mean a sell-off is coming. Look at support zones and delivery volumes. Use the chart. Don’t use emotion.

    How Pre-Market Tools Help—If You Don’t Let Them Rush You

    Zebu’s platform shows:

    • Gap-up/gap-down stocks before 9:15
    • Volume spikes in early order placement
    • Sector buzz based on early interest

    But these aren’t meant to trigger immediate trades. They’re there to give you a sense of what the day might look like—not what it has to be.

    Set alerts, not alarms.

    The Best Traders and Investors Don’t Rush at Open

    Some of the most consistent users we observe log in early, yes. But they don’t place orders at 9:01. They:

    Observe index futures
    Check if their stocks are reacting to news
    Watch the first candle post-open
    Wait 15 minutes before acting

    This routine avoids knee-jerk reactions. It turns pre-market into prep—not panic.

    What to Actually Do This Morning

    Here’s a checklist for Wednesday:

    1. Check SGX Nifty — Directional cue, not a guarantee
    2. Read global close — Only act if the reasons affect your holding
    3. Look for India-specific data — FII flow, RBI commentary, earnings results
    4. Check your stock’s pre-market buzz — Gap ups, upgrades, volume
    5. Ask yourself one thing — Is this part of your plan?

    If the answer is no, don’t act. That simple filter could make your week easier.

    Final Thought: Pre-Market Is a Lens, Not a Lever

    Not every gap needs to be filled. Not every red candle needs to be caught. Not every pre-market dip means a crash is coming. Indian markets have matured. So have Indian investors. At Zebu, we’re designing tools that help you see more, not do more. Because in the 45 minutes before the bell rings, your best move is often just to observe.

    Let the market come to you. Most of the time, it does.

    Disclaimer

    This article is for informational purposes only. Zebu does not provide investment advice or guaranteed outcomes. Investors are encouraged to consult certified professionals before making trading or investment decisions based on market trends or data.

    FAQs

    1. How to understand market trends for beginners?

      Start by observing pre market trends and key stock movements; even beginners can spot early signals of momentum before regular trading begins.

    2. What are pre-market trends in the stock market?

      Pre-market trends are price movements and trading activity that occur before the official market opens, giving clues about possible opening behavior.

    3. How can I read pre-market data effectively?

      Focus on volume, price changes, and news catalysts; this forms the basis of a solid pre market trading strategy.

    4. What factors influence pre-market stock prices?

      Earnings announcements, global cues, economic data, and major news events drive pre-market stock prices.

    5. Can pre-market trends predict regular market movements?

      They can offer hints, but pre-market trends aren’t always definitive-use them as one tool alongside broader analysis.

  • Are Charting Tools Really Helping You or Just Distracting You?

    Spend any time in the world of trading and you’ll quickly be introduced to an overwhelming number of charts, graphs, and technical indicators. The colorful candlesticks, moving averages, and oscillators give you the sense that you’re operating with precision—that if you just find the right pattern, success is inevitable.

    But for many retail traders, especially those just getting started, charting tools can become less of a guide and more of a trap. So how do you know if they’re actually helping you trade smarter—or if they’re simply distracting you from what matters?

    Let’s explore this question from the perspective of a trader who wants to improve—not impress.

    Charting 101: What You’re Actually Looking At

    Let’s start by making one thing clear: charting is not the problem. Good charting platforms—Zebu includes one powered by TradingView, for example—can offer incredibly useful insights.

    A basic chart shows you the price movement of a stock over time. Candlesticks show open, close, high, and low prices. You can overlay technical indicators like:

    • Moving Averages (MA)
    • Relative Strength Index (RSI)
    • Bollinger Bands
    • MACD (Moving Average Convergence Divergence)
    • Volume

    These tools attempt to show you whether a stock is trending, reversing, or losing momentum. They give clues, not guarantees.

    Used well, they give structure to what would otherwise be guesswork.

    Where It Starts Going Sideways

    The trouble begins when you go from a few indicators to… all of them. You start with RSI. Then you add MACD. Then Fibonacci retracement levels. Then Ichimoku clouds. Before you know it, your chart looks like a complicated cockpit. You’re no longer seeing price—you’re seeing confusion.

    This is known as “analysis paralysis.” Too many signals, and you don’t know which one to trust. You hesitate. You overthink. And in trading, that usually means missed opportunities—or worse, bad decisions.

    The Illusion of Precision

    Here’s the trap: a complex chart feels smarter.

    You look at it and think, “Now I’m seeing what the professionals see.” But more often than not, the chart is just reflecting what the stock already did—not what it will do.

    Indicators lag. They are based on past price movement. They confirm, not predict.

    A stock can still break a key resistance level for no reason you can see on a chart. A company’s earnings surprise can make a perfectly set up pattern irrelevant in seconds. That doesn’t mean charts are useless. But it does mean they aren’t the crystal balls they’re often sold as.

    Ask: What’s the Question You’re Trying to Answer?

    Before opening a chart, ask yourself: what am I trying to figure out?

    • Am I looking for a trend?
    • Am I waiting for a breakout?
    • Am I spotting a reversal?

    Each of these has a few specific tools that help. That’s it. You don’t need five indicators to answer one question.

    For example:

    • For trend confirmation? A moving average or two.
    • For momentum? RSI and MACD.
    • For volatility? Bollinger Bands.
    • For volume confirmation? Plain volume bars.

    Keep it lean. Let the chart serve the question—not the other way around.

    Who’s Actually Using the Tool—You or Your Emotions?

    It’s easy to convince yourself that you’re doing “technical analysis” when really you’re just scrolling through charts until one makes you feel good about your bias. You bought a stock. Now you’re scanning for indicators that justify holding. Or you missed a trade and are searching for “proof” that it wasn’t a good setup anyway.

    This is a very human impulse—but it’s not analysis. It’s emotional cushioning.

    The right way to use a charting tool is before the trade, when your thinking is clear. Not afterward, when you’re defending a position.

    Chart Literacy > Chart Obsession

    What separates the casual chart-watcher from the skilled trader is the ability to read price action, not just apply layers of tools. If you can look at a basic candlestick chart and understand:

    • What buyers and sellers are doing
    • Where momentum shifted
    • How strong the breakout or breakdown is

    …then you’re already ahead of most traders.

    Indicators are meant to support your read—not replace it. And no matter how advanced a chart looks, it still needs context. News events, earnings reports, sector movements—these aren’t on the chart, but they matter.

    Are You Spending More Time Charting or Trading?

    Here’s a quick gut check: if you spend 80% of your time adjusting chart settings and only 20% making decisions, something’s off. Trading is a decision-making sport. Charts are a planning tool. The goal isn’t to design the most visually complex chart. The goal is to make clear, consistent choices.

    Many experienced traders set their charts once and rarely change them. Why? Because they’ve figured out which tools give them clarity—and they stick to those.

    Try that approach. Pick 2–3 indicators that make sense for your style. Test them. Tune them. Then leave them alone.

    Mobile Charting: Convenient, But Still Requires Clarity

    Apps like Zebu’s now offer full mobile charting, including advanced indicators and drawing tools. This is a huge shift from a few years ago, where you had to use a desktop.

    But just because it’s easy to chart on your phone doesn’t mean you should chart all the time.

    Set alerts instead. If a stock crosses a level you care about, let the app tell you. Don’t sit there refreshing RSI every 5 minutes.

    Tools are there to reduce emotional friction—not amplify it.

    So… Are Charting Tools Worth It?

    Yes—if:

    • You know what you’re looking fo
    • You’ve learned the logic behind each tool you use
    • You apply them consistently across trades
    • You’ve seen them work for your style and temperament

    No—if:

    • You’re using them to justify impulsive trades
    • You switch tools every week
    • You feel overwhelmed more than informed
    • You spend more time in the tool than using its output

    A chart is a map. But even the best map is useless if you don’t know where you’re trying to go.

    Final Thought: Tools Don’t Make You a Trader—Process Does

    It’s tempting to think that more screens, more indicators, and more chart overlays will turn you into a sharper, faster trader. But the truth is, trading success is mostly boring.

    It’s about discipline. Repetition. Structure. Thoughtful risk. Charting tools can absolutely be a part of that. But only if they fit your process. Not someone else’s. Not some YouTube strategy with 10 moving parts.

    Just yours. So the next time you stare at a screen full of lines, candles, bands, and colors—pause. Ask what you’re really trying to see. Then remove what you don’t need.

    Because often, trading clarity comes not from adding more—but from removing the noise.

    Disclaimer

    This blog is meant to provide general information and reflect broad market observations. It doesn’t take into account your specific financial situation or investment needs. Zebu shares this for educational purposes only and doesn’t promise returns or make personal recommendations. Before you act on anything here, it’s always a good idea to talk to a qualified financial advisor.

    FAQs

    1. Is chart reading important in trading?

      Yes, trading chart patterns help traders spot trends, entry points, and exits, making chart reading an essential part of technical analysis.

    2. Are these charts really useful for traders?

      Stock chart patterns are useful for identifying market momentum, but they’re most effective when combined with other research and analysis.

    3. Do charting tools really help improve trading performance?

      Charting patterns in technical analysis can improve performance by providing visual insights, but they don’t guarantee profits on their own.

    4. Is it possible to trade without charts?

      Yes, you can use fundamental analysis, news, and other indicators, but trading chart analysis often gives an edge in timing decisions.

    5. What are the main drawbacks of relying too much on charting tools?

      Over-reliance can lead to ignoring fundamentals, misreading patterns, and making emotional decisions based on short-term movements.

  • Things To Expect From An Advanced Trading Platform

    As a trader, we understand that you need the right features where features continuously simplify the process of executing your strategy. It’s also important to have access to advanced features on your trading platform that can help you make better investment decisions and improve your overall trading experience. Let’s discuss the advanced features that the trader and investor of today deserve.

    And we’ll also make the case for why you should choose our latest creation Mynt – a highly advanced and feature-packed trading and investing platform that lets you do those things more confidently and easily.

    Firstly, biometric authentication is a feature that has become increasingly popular in recent years. We have enabled biometric authentication in MYNT’s web and mobile applications, allowing clients to login without needing to use a username or password from the second time they access the platform. Additionally, MYNT web and MYNT mobile have OTP, TOTP, and authenticator features that comply with exchange norms.

    Secondly, having access to different types of market watches can be incredibly helpful as it helps reduce the time it takes to load a huge number of scripts into a market watch. MYNT offers three types of market watch: normal, predefined, and index. The normal market watch is customizable, while the predefined market watch automatically fetches information from the client’s holdings. The index market watch allows clients to view all the index data for NSE, BSE, and MCX with a separator.

    Thirdly, it’s important to have different types of orders available to you to help you reduce the time it takes to execute a default type of trade. MYNT offers GTT orders and multi-leg orders from the market watch. Additionally, MYNT provides clients with depth information, including 52-week highs and lows, and FO data, as well as pivot levels for each script. Also, you can add your favourite template for trading like the number of lots or capital so that they are pre-loaded in the order window when you trade.

    Fourthly, MYNT offers an option chain feature with 5, 10, and 15 sticks of data for FNO scripts on upcoming expires. Additionally, MYNT offers advanced Tradingview chart features, such as multiple charts on the same window, and the ability for clients to place trades directly from the chart. This means that you can access indicators and charts available in the largest library for traders.

    Fifthly, MYNT offers a cash SIP feature that allows clients to invest systematically on particular stocks based on their investment amount and number of stocks on desired dates every year, month, week, or day. You can simply enter the details like the name of the stock and the number of shares or the amount of money you want to spend and Mynt will take care of the rest.

    Finally, MYNT provides clients with market movers information, such as top gainers, top losers, most volumed, and most active by value for all segments. Clients can trade these market movers directly without having to add them to their watchlists.

    In conclusion, these are just some of the advanced features that every trader deserves in a trading platform. MYNT offers all of these features and more, making it a top choice for traders. MYNT is launching on 6th March, and we encourage traders to give it a try and see how these features can improve their trading experience.

  • Swing Trading vs Day Trading: Which One is Right for You?

    Swing trading and day trading are both popular methods of active trading, but they have distinct characteristics and may be better suited to different types of traders. In this blog post, we have discussed which one you should go for depending on your personality and what exactly it entails.

    Swing trading is a style of trading in which positions are held for several days in an attempt to profit from short-term price movements. The goal of swing trading is to capture gains in a stock within one to four days. Swing traders also use technical analysis to determine the short term trend of a stock and hold it for a few days by ignoring intraday trends. This means that while the risk can be great, the reward will also be equally great.

    One of the main benefits of swing trading is that it allows traders to participate in the market without having to constantly monitor their positions. Swing traders may only need to check their trades a few times a day, which can be a good fit for those with busy schedules or other obligations. This is in comparison to medium term investors and long-term investors who do not check their portfolios as often as swing traders.

    Day trading, on the other hand, is a style of trading in which positions are opened and closed within the same trading day. Day traders also use technical analysis to identify short-term price trends and patterns, and may also use news and events to make trading decisions. They are mostly full-time or part-time traders who depend on trading for their monthly income.

    The main benefit of day trading is that it allows traders to take advantage of short-term price movements that may occur throughout the trading day. They do not have to worry about overnight news and volatility since they do not have open positions to worry about. Day traders can also take advantage of leverage, which can magnify gains but also increase risk. However, day trading can be a very time-consuming and stressful activity, as traders need to constantly monitor their positions and make quick decisions.

    In conclusion, swing trading and day trading are both popular methods of active trading, but they have distinct characteristics and may be better suited to different types of traders. It’s important to evaluate your own time availability, risk tolerance, and investment goals before deciding which style of trading is best for you. Therefore, depending on your temperament and time availability, you can choose the right one for you. But please understand that both can be difficult to master and can require diligent practice and a good strategy to become successful.

  • Open Interest Analysis 101: Understanding the Basics

    Traders employ the open interest analysis approach to assess the market’s underlying activity. It may be used to spot patterns, understand market mood, and execute good trades. We’ll go through the fundamentals of open interest analysis in this blog post, including what it is and how it can help you trade better.

    Let’s define open interest first. The total number of contracts that are still open in a given market is known as open interest. It is the quantity of contracts that have been purchased or sold but have not yet been countered by another transaction. Open interest, then, is the number of trades that have been made but not yet completed.

    There are several methods to use open interest to spot patterns and market sentiment. For instance, increasing open interest may signal a greater influx of buyers, while declining open interest may signal a greater influx of selling. So, if you are looking to buy a call option, make sure that others are also agreeing with your view based on the open interest.

    The strength of a trend may also be determined using open interest. For instance, a strong bullish trend may be indicated if the open interest is increasing while the price is also increasing. On the other hand, if the price is declining and the open interest is increasing, this can point to a strong negative trend.

    Identifying possible trading opportunities may also be done using open interest. For instance, if open interest is high in a certain market, it can mean that there is a lot of trade going on there. This may indicate that there is a lot of market liquidity, which would make it simpler to initiate and close trades. Furthermore, if open interest is low in a certain market, it can be a sign that there is less trading activity there, which might make it more challenging to initiate and exit trades.

    It is essential to remember that while making trading decisions, open interest should not be employed alone. Along with other market indicators like price and volume, it should be used. Open interest should only be used as a confirmation tool because it is not a leading signal.

    To sum up, open interest analysis is an effective instrument that traders may use to assess the underlying market activity. It may be used to spot patterns, comprehend market mood, and execute wise trades. Traders may better comprehend the market and make wiser trading decisions by grasping the fundamentals of open interest analysis.

    Please be aware that open interest analysis should be used in conjunction with other indicators and analytical tools as it is just one of many tools that traders use to assess the market. The risk involved in trading on the financial markets and the fact that previous performance does not guarantee future success should also be kept in mind. Before making any investment decisions, it is always advisable to speak with a financial counsellor.

  • Swing Trading Vs Intraday Trading – Which One Should You Choose?

    Let’s start by understanding the different ways of trading. The main differences between the two ways of trading are investment, commitment, and time. Traders choose different trading strategies based on time, money, and psychological factors.

    Intraday Trading

    The Financial Regulatory Authority (FINRA) says that day traders are people who do many “round trips,” at least four of which happen every five days. Day trading might be the most common way to trade. Most traders are day traders, which means they make money from the price changes on the market during the day. All-day trading takes place in a single day, as the name suggests. Traders open a number of positions during trading hours, which they all close before the end of the day.

    Day traders use technical analysis and tools to get real-time updates. They often trade full-time and keep a close eye on the market for business opportunities. At least in terms of percentages, day trading gives people with small trading accounts more chances to make money. They don’t try to make a lot of money from one trade. Instead, they should do a number of transactions to make enough money.

    In the end, day trading is a type of high-frequency trading that involves small amounts and always buys stocks for less than what they sell for.

    Swing Trading

    The main difference between day trading and swing trading is the length of time. During a swing trade, days or weeks can go by. Swing traders don’t make a trade until they see a pattern. They don’t trade full-time, but they use both fundamental and technical research to spot trends as they happen and trade in line with them. They would look for stocks that could make them the most money quickly. There is more risk, but there is also more chance of making money.

    Differences between day trading and swing trading that are important to know

    Swing trading and day trading are both types of trading, but they are not the same. Here are some of the most important differences between the two ways of trading.

    • Day traders buy and sell a lot of different stocks in the same day. Swing traders buy and sell a number of stocks over a longer time period (usually between two days to several weeks). So that they have a better chance of making money, they look for a pattern of trends.

    • Day traders will close out all of their positions before the closing bell rings. Swing traders would hold their position for at least one night before settling it the next day.

    • Swing traders only work for a few hours each day. They don’t spend the whole day tied to their computers. Day trading takes a lot of time and commitment.

    • Day traders make a lot of trades every day, which increases their odds of making money. Gains and losses, on the other hand, are smaller. Swing trading has fewer wins and losses, but they are often bigger.

    • Day traders need the newest hardware and software. Day traders must have extremely rapid trigger fingers. You don’t need complicated or cutting-edge software to do swing trading.

    A trader’s main goal is to make as much money as possible. So, between swing trading and day trading, which is better?

    Even though both ways of trading have many pros, you should be aware of their cons before choosing one. The list that follows goes over the pros and cons of each one.

    • Swing trading needs less attention because it takes place over a longer period of time. Day trading, on the other hand, requires regular market watching and quick decisions.

    • Day traders try to make as many trades as possible to make the most money in a single day, while swing traders try to make a big profit.

    • Swing traders take on more risk when they leave their position open overnight. On the other hand, day traders close their trades at the end of the day. So, there is no longer any risk.

    • Swing traders wait until a deal has been going on for a while before using that time to watch how the market moves. It helps make things safer. Day trading is easier for most traders to do because it needs less capital than swing trading. Day traders have to make trades quickly because one loss could wipe out their whole day’s profit.

  • What Are GARP Stocks?

    No single investment strategy is perfect. No single investment strategy is the “end-all, be-all” answer to all of your needs. Because of this, investors often mix and match two or more investment strategies to find a combination that works for them.

    This mix gives the investor a benefit in one of two ways. First, it can be done by combining the good things about the different strategies so that the good things outweigh the bad things. In a second way, one or both of the strategies that make up the combination cancel out the problems of the other strategy.

    One way to invest in more than one type of stock is called GARP. Growth at a fair price is what GARP stands for. GARP is an investment strategy that combines Value Investing and Growth Investing to give an investor “the best of both worlds”.

    So, to understand the GARP strategy better, we must first learn about Value Investing and Growth Investing. So let’s get down to business.

    Value Investing

    Value investing is like getting a good deal when you shop.

    Let’s say you go out to buy something, anything. You can buy a low-quality product for a low price, or you can buy a well-made product that is more expensive than the low-quality product but less expensive than the regular market price of the good. Which one do you want?

    Clearly, the second one is the winner. Yes, it would cost more than the low-quality product, but the fact that it would be better and cost less than usual makes up for the price difference.

    Well, value investing is when you buy shares in companies that are strong at their core, which means they run their business well. Share prices that are higher than, say, penny stocks are a natural result of this performance. Because of this, you buy these shares when their prices are lower than what they should be. As the market straightens out, the share price will rise to what it should be, and the investor will enjoy capital appreciation.

    Value investing usually involves buying shares of companies that have been around for a long time and have a strong position in the market because of how they do business.

    The idea behind value investing is also that the efficient market hypothesis is not true. This means that shares can be overvalued or undervalued because their prices don’t reflect all the market conditions and facts that affect their prices.

    Value investors try to figure out what a share’s fair value or “intrinsic value” is. An investor can use a number of different fundamental analytics, but Price to Book (P/B) Ratio, Price to Earnings (P/E) Ratio, and Free Cash Flow are some of the most common ones.

    Growth Investing

    Growth investing is a way to make money by letting the value of your investments go up. This capital growth happens because the company, whose shares are called “growth stocks,” has new technology and services that help the business run.

    Access to newer technology and services gives the business an edge, which means it can make more money than its competitors in the industry or even in the market as a whole. Most of the time, the extra money doesn’t go to the shareholders. Instead, it goes back into the company’s capital to give it more resources to use the better technology and services.

    There are two main ways in which growth investing is different from value investing. First, growth stocks usually belong to new companies that have a lot of room to grow because they are in markets that haven’t been fully explored yet. Because of this, these stocks are a riskier bet than those that are based on value.

    Another difference is that growth stocks are often overvalued because of their high demand, which comes from the fact that they have a higher chance of making money. When it comes to investing in stocks for growth, investors pay attention to five key things about the stock in question. These are the company’s past and future earnings growth, its profit margins, its return on equity, and the performance of its stock price.

    Investing in GARP

    GARP stocks are mostly growth stocks that have been put through some value investment stock filters.

    This means that investors are looking for stocks with high growth rates to add to their portfolios. The price of the share affects how value investing affects how stocks are chosen. This means that a GARP stock is a growth stock that is undervalued.

    GARP investing doesn’t have any rules about what metrics investors should look for when buying shares of a company. The Price/Earnings to Growth (PEG) ratio is an important metric for this strategy. If the ratio is less than 1, the price is in line with the growth of the business and not too high, like with growth stocks.

    Filtered Goodness

    As was already said, no investment plan is perfect. So investors shouldn’t put any of the above strategies on a pedestal that is too high. The GARP investing strategy is a mix of ideas that has become popular because it works better than other mixes. This doesn’t mean that any of the less popular strategies are less useful or that GARP isn’t a good filter.

    So, investors should always do their homework and use or ignore pre-made strategies based on their goals, risk tolerance, time horizons, and many other factors. Do you use any combinations of investing styles or strategies that have worked well for you?

  • What is Algo Trading and How Does It Work?

    Algorithms are everywhere. From our smartphones to laptops to anything with technology, algorithms power the functionality of billions of entities. With the rise of more advanced technologies, this piece of logical code is now used in almost every field. Algorithms use user data, patterns from the past, and a set of instructions that have already been decided on to reach their goals. Mutual Fund companies, for example, use an algorithm to take the set amount out of your bank account every month for a SIP

    Algorithms are used in the virtual transaction system to make sure that trading is clear, that users have a good experience, and that there aren’t any hiccups or delays. But depositories and stockbrokers aren’t the only ones who use algorithms. Traders use algorithms to avoid mistakes made by retail traders and increase their chances of making money. Algorithmic Trading or Algo Trading is the name for this process.

    Before we get into what is Algo trading it is important that you understand that it requires a powerful tool. As a share broker company, we understand the requirements of an avid trader and offer a seamless . online trading platform with the lowest brokerage options.

    How does algorithmic trading work?

    Algorithmic trading is a way to trade quickly on the financial market by using trading instructions that have already been programmed. Traders and investors use trading software, which they tell what to do based on time, volume, and price. When the market triggers the set instructions, the investor’s orders are carried out by the trading software. In general, Mutual Funds, Hedge Funds, Insurance Companies, Banks, etc. use algorithmic trading to make a large number of high-volume trades that would be impossible for humans to do.

    Algorithmic trading lets investors make more deals in less time without human emotions and mistakes.

    Take a look at the following example to better understand what algo trading is.

    The following set of instructions can be given by an investor for algorithmic trading to take place:

    Instruction 1: Buy 200 shares of XYZ company if the price goes above its 15 minute high.
    Now, if the price of a share goes above the 15 minute high, the algorithmic trading system will automatically place an order for 200 shares of XYZ company. But the algorithmic trading software won’t do anything with the order unless the conditions are met.

    Instruction 2: Sell 200 shares of XYZ company if its 20-day moving average falls below the 200-day moving average on the 5-minute time frame.
    In this case, the algorithmic trading software will sell 200 shares of XYZ company if its 20-day moving average falls below its 200-day moving average.. If it doesn’t, the order will not be executed.

    For algorithmic trading to work, each set of instructions must be carried out only once. For example, in Instruction 1, the algorithmic trading software will place a buy order if the price stays above the 15-minute high for even a few seconds. After those few seconds, the price might drop back below the entry point and develop a loss. But the order would have already been placed as soon as the conditions are met.

    Algo trading has come a long way in India and is all set to reach greater heights. You can simplify your trading system or add as many data points to it as you want but it is crucial to understand its working and monitor it closely.

    As we mentioned earlier Algo trading requires a powerful tool. As a share broker company, we understand the requirements of an avid trader and offer a seamless online trading platform with the lowest brokerage options.

  • The Basic Rules Of Day Trading You Should Know

    Day trading is a way to trade stocks that is both risky and profitable. Day trading, which is also called intraday trading, is when you buy and sell stocks during the same trading session. Here are some basic intraday trading tips you can use if you want to use this strategy to make money on the stock market.

    Before we get into the rules, the basic rule of trading is to use the right tools — as a share trading company we understand this better than anyone and are here to offer our customers the best Indian trading platform along with the lowest brokerage options.

    1. Choose the best stocks

    When you start day trading, the first and most important thing you should do is choose the right stock to buy. Not all stocks are good choices for trading during the day. Since you would be buying and selling them during the same trading session, you would need to choose stocks with a lot of liquidity, which will make buying and selling them easier. Large-cap stocks and mid-cap stocks are usually the best choices for day trading because they have a lot of buyers and sellers.

    2. Set prices to enter and exit the market

    Once you’ve decided on the stock you want to trade, the next step is to set entry and exit prices. Going into a trade without any goals is a sure way to lose money. Set a price at which you want to buy the stock and stick to it, even if it means you might not be able to buy it. Set a goal for when you want to sell the stock, even if it means you might miss out on any gains the stock might make in the future.

    3. Don’t forget to set stop loss
    After buying the stock, the first thing you should do is set a stop loss. This will keep you from losing a lot of money if the stock moves in a way you didn’t expect. Let’s say you buy a stock for Rs. 100 with the hope that it will go up. But as a safety net, you set a stop loss at Rs. 97. Now, if the stock goes against your expectations and drops to Rs. 97, the stop loss will be triggered, and your stock will be sold at a loss of Rs. 3. You will also be protected if the price goes down even more.

    4. Always follow the trend

    This is one of the best tips you can use when trading during the day. If the market is going up, it’s a good idea to buy stocks. And if it is bad, it is best to sell stocks. Contrarian views on the market are never a good idea because they can backfire. For example, many people short-sell stocks when the market is bullish because they expect the price to go down. These kinds of changes don’t happen very often.

    Conclusion

    Even though intraday trading is riskier than regular trading, when done right, it can be one of the most profitable ways to make money consistently. So, if you want to do day trading, you must have both a trading account and a Demat account. Get in touch with us right away to start trading stocks.

    As a share trading company, we understand this better than anyone and are here to offer our customers the best Indian trading platform along with the lowest brokerage options. Want to try out our tools? Get in touch with us.

  • Who Are The Market Participants Of The Futures Market?

    A market is strong not only if there are products to trade and a way to keep things in check, but also if the people who take part in it are good. The same is true of the futures market for commodities. Even though there are thousands of traders who buy and sell precious metals, industrial metals, and agricultural goods, these traders and market participants can be put into four main groups. This sorting is very important because each of these types of market participants leaves its own mark on the market and adds to its strength in its own way.

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    1. Speculators on the commodity market

    The time that speculators are on the market is very short. They might want to get out of their long or short position the same day or in a few days. They make money by understanding global economic cues and determining which commodity will go up or come down. In the equity derivatives market, speculators are also often called intraday traders. Most speculators don’t care which way the market is going and are willing to trade both ways, that is, on the long side and the short side. Speculators usually try to be on the right side of the market’s overall momentum and the momentum of the commodity they are trading. Since speculators depend a lot on small trading opportunities in the commodity markets, they use technical charts, supports, resistances, break-outs, patterns, etc. to help them make their trades. Speculators play a very important role in the commodity markets because they keep the markets liquid and make sure that the bid-ask spread is as small as possible.

    2. Margin traders who trade in the direction of the market

    When it comes to certain commodities, these traders have a slightly longer-term view than speculators, who usually work at the short end of the market. Since margin trading is possible in the futures market, traders use futures as a stand-in for buying the commodity on the spot market. Instead of locking up all of their money in a spot position, traders who pay a margin use futures as a stand-in for spot positions. Margin traders are not only willing to wait until the contract ends, but they are also willing to take a longer-term contract and pay the rollover cost to keep the position open. Margin traders usually don’t put too much stock in technicals, but they have a strong fundamental premise that makes them willing to pay the roll cost to keep the position open for longer. Most of the time, the trades of these margin traders give traders and analysts hints about which commodities are getting long-term interest and are a leading indicator of changes below the surface.

    3. Spot / Futures Arbitrage Traders

    Arbitrage traders do something very different in the commodity markets. By trying to lock in spreads, they actually try to make the prices on the market fairer. Before we can figure out how arbitrageurs work in the commodity markets, we need to know how they do business in the stock markets. If JSW Steel is quoted at Rs.500 in the spot market and Rs.510 in the stock futures market, the arbitrageur will buy JSW Steel at Rs.500 in the spot market and sell JSW Steel Futures at Rs.510. So, he can be sure of making a profit of Rs. 10 till the price gap is bridged. On the day of expiration, both the spot position and the futures position will end at the same price, giving the arbitrageur the chance to make the 2% spread. The markets for commodities can be a bit more complicated. First of all, different agencies control the spot market and the futures market for commodities, which makes things more complicated. Second, unlike stocks, commodities have extra costs like shipping fees, insurance costs, storage fees, stamp duty, etc., which all need to be taken into account when figuring out the spread. But when all of these costs are taken into account, if the arbitrage spread on any commodity is positive, the arbitrageur will buy in the spot market and sell in the futures market. By fixing any problems with prices, the arbitrageur will not only be sure to make a profit, but he or she will also make the market work better. Arbitrage takes a lot more time and money than speculation or trading on margin.

    4. Hedgers

    Hedgers are people who have an underlying exposure to a certain commodity. Let’s say you have a big order of silver that you need to give to a jeweller in 3 months. The only problem is that the deal will be made at the price that was in effect on that date. This puts you at risk for price changes over the next three months. You’re happy with the price of silver right now, but you’re worried that it might go down in 3 months. You can protect yourself by selling short 3-month silver futures. By doing this, you’re securing your position at a price that seems good to you at first. So, you don’t care what happens to the price of silver over the next three months. If the price of silver goes up, you will lose money, but that is what a speculator does. As a hedger, it is your job to protect yourself from losing money, which you have done well. Hedgers are traders who have real exposure to the underlying market. Because of this, they make the commodity markets more stable and trustworthy.

    These are the four main participants of the commodity markets. The direction and health of the commodity markets are determined by what these four people do together.

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