Posted by This month in January 2021 my goal was to make 100Rs. in Net profit trading stocks.
I am glad to say that I made 80Rs. While also gaining a lot of valuable experience.
In nearly one month of trading I have realized it is difficult to trade just by staring at the screen.
However it was not all in vain. In fact, this trading venture although challenging proved out to be very useful.
It was useful because it taught me that the candles on the candlestick chart of any stock represents collective action of market participants in that stock.
I found that it is difficult to trade the stock by just looking at the candles and patterns.
However I found that it is relatively much easier to trade when combining technical factors such as the candle patterns and volume with the news in that particular stock, industry or even with the whole index. It makes the picture a lot more clearer.
For example in Indigo there is often a heavy movement in price just after the company announces its quarterly results. The move can be in either direction but that doesn’t matter as we can take trade in both directions.
In Indigo there was a big price movement in downward direction on 28th January 2020. On 27th January 2020 the first case of COVID-19 was confirmed in India and the stock naturally reacted.
If anyone followed the stock and the news it would have been crystal clear to them what was happening in the stock. They would have taken appropriate positions and benefitted.
This is news based trading. Or trading based on combining technicals as well as fundamentals.
This kind of news based trading is what Rakesh JhunJhunwala, The Big Bull, apparently often does.
In many interviews when asked about how he got into stock market he says,
“My father was also interested in stocks. When I was a young child, he and his friends would drink in the evening and discuss about the stock market. I would listen to them and one day I asked him why do these prices fluctuate. He told me to check if there is a news item on Gwalior Rayon in the newspaper, and if there was Gwalior Rayon’s price would fluctuate the next day.”
So, I have also decided to do this kind of trading. I now read articles on Finshots Markets, Bloomberg quint etc. and gain my knowledge about the company, industries, economy and government.
This way I can interpret the actual meaning behind those price movements and candle patterns. This way I can combine my knowledge of Technical analysis & Fundamental analysis to trade stocks while also practicing proper Risk management by keeping Quantity low initially.
I have found it much more productive to read about companies rather than just stare at the screen all day.
At the same time, I have also realised the importance of technical analysis while buying or selling stocks.
Investing is Really Fun. And it can make you Rich.
Bye!