Zebu blog

Tag: Price Levels

  • The Art Of Placing The Perfect Stoploss

    Stop loss is like a gauge that tells you how much you could lose on a trade. It’s important to set your stop loss ahead of time so you can be ready if a trade goes in a different direction. A stop-loss order is used to cut down on the loss if the price of a stock doesn’t move as expected and makes the traders lose money.

    A day trader sets her stop loss level before she makes her trade. When the cost hits the predetermined stop loss level, the trade ends automatically. The trader can keep the rest of the money she has put in. One can start making a plan for getting the lost money back. By putting in a stop-loss order, a losing trade doesn’t lose any more money.

    How does Stop Loss work?

    Let’s look at an example to see how a stop loss would show up on a trade. You must now decide where to put your stop loss. For example, if you want to buy a stock that is selling for 105 right now, you must decide where to put your stop loss. Keeping the stop loss below 100, at 99, is a great goal. This means you are willing to lose Rs 6 on this particular trade.

    You should also set your target at 1.5 times the percentage of the stop loss. In this case, the stop loss was set at Rs 6, which you were willing to lose. So, you should try to get at least 9 points, which would bring you to 105 + 9 = 114.

    Where should your stop loss be?

    Most new traders have a hard time figuring out where to put their stop loss settings. If the stop loss level is set too high and the stock moves against you, you could lose a lot of money. Instead, traders who put their stop loss level too close to the purchase price lose money because their trades are closed out too quickly.

    There are different ways to figure out how much each trade’s stop loss should be. From these strategies, you can figure out three ways to choose where to put your stop loss:

    How does Stop Loss work?

    Intraday traders often use the percentage method to figure out where their stop losses are. With the percentage approach, all a trader has to do is say what percentage of the stock price they are willing to lose before they close the position.

    Think about the case where you don’t mind if your stock loses 10% of its value before you sell it. And let’s say that one share of your stock is currently worth 50 cents. So, your stop loss would be Rs 60 x 10%, or Rs 6, less than what the stock is worth on the market right now.

    Determine Stop Loss Using the Method of Support

    Using the support method to figure out stop loss is a little harder for intraday traders than using the percentage method. But it is often used by intraday traders who know what they are doing. For this strategy to work, you need to know what your stock’s last support level was.

    Zones of support and resistance are places where the stock price often stops going up or down. Once you’ve found the support level, you only need to set your stop loss price point below that level. Let’s say you own stock that is now selling for Rs 500 per share, and the most recent support level you can find is Rs 490. It is recommended that you put your stop loss just under 490.

    Most of the time, the levels of support and resistance are not exact. Before quitting a trade, it’s smart to give your stock a chance to fall and then bounce back from the support level. Set the bar just a little bit below the support level to give your stock some room to move before you decide to close the deal.

    Using the Moving Averages Method to Figure Out the Stop Loss

    Compared to the support method, the moving average method makes it easier for intraday traders to decide where to put their stop loss. A moving average has to be put on the stock chart first. A longer-term moving average is better because it keeps you from putting your stop loss too close to the stock price and getting out of your trade too soon. Once you’ve put in the moving average, set your stop loss a little below it so it has more room to move in either direction.

  • How To Trade With Support And Resistance


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    Technical analysts use a number of rules to predict how much stocks will go up or down in the future. Once you know what a trend is, the next important idea in technical analysis is support and resistance.

    The theory of support and resistance

    According to technical analysis, when the price of a stock reaches certain predetermined price points, it tends to stop and move in the opposite direction.

    Support level: This is the point where the price of a stock stops going down. It’s possible that the price will go up instead of down. At this point, it is likely that the demand from buyers will be much higher than the demand from sellers.

    Resistance level: The opposite of a level of support is a level of resistance. It is a price level (ceiling) above which the stock price is not expected to rise. At this price, the market for this stock is better for sellers than it is for buyers.

    What does support mean?

    The support and resistance levels on a candlestick chart might help you figure out the target price at which to buy or sell. The support level is where the market expects more buyers than sellers. The price at which traders can expect to see the most buying interest in a stock is called the support level on the chart.

    In a falling market, the support-resistance indicator, which is an important level market player to watch for, is often a sign to buy. The support line is formed when the price of a security goes down and the demand for shares goes up.

    What is resistance?

    On a candlestick chart, a price has reached the resistance level when there are more sellers than buyers. Resistance level is a price point on the chart where traders expect to sell as much of a certain stock as they can. It keeps the price from going up even more.

    Since resistance is always higher than the current market price, it is often a sign to sell. In a bullish market, the resistance level is one of the most important things that traders pay close attention to. Support and resistance are, in a nutshell, the exact opposites of each other.

    By looking at the support and resistance levels, the trader can get an idea of how the price of a stock will move. But there is always a chance that the stock price will go above these levels. When this happens, which happens often, a new level of support and resistance is set up.

    If the support level is broken, the stock price will keep falling until it finds a new level to support it. Also, if the stock price breaks through the resistance level, it keeps going up until it hits a new resistance level.

    Resistance and Support: How Reliable Are They?

    Even though support and resistance can tell you when to buy or sell, you shouldn’t rely on them alone. Or, to put it another way, before deciding whether or not to buy or sell a certain stock, you should think about a number of other things.

    When it comes to technical analysis,
    Predicting the future price of a stock is the most important (and hard) part of analysis for a trader in the stock market. The next high (or low) price cannot be predicted with any level of reliability.

    So, the idea of support and resistance is a good way to understand how prices change. Support and resistance levels help traders make decisions because they let them see patterns.

    For example, if a trader sees that a stock has reached a support level, he could buy more shares. This is done so that the stock has a better chance of coming back. In a similar way, the trader may sell his shares and make money when the stock reaches a level of resistance.

    When a stock’s price reaches these levels, you should always be careful because the area between the support and resistance levels is known to be very volatile.

    Conclusion

    Traders can use the idea of support and resistance to spot trends in the stock market and take advantage of them.

    This doesn’t mean, though, that the stock will never go above a support or resistance level. The price of a stock can always go up or down. Also, as a trader, you shouldn’t make trades based only on these levels.