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Best Stock Market Technical Analysis Course
Mastering Technical Analysis in 4 Simple Steps
How to do Technical Analysis?
Evaluating and analysing stocks of companies to make buying and selling decisions is known as stock analysis. Through fundamental analysis an investor makes their decision to buy/sell the stocks based on a company’s future growth, management, products, and market potential of its industry. Similarly, when you see a trader making buy or sell decisions based on strategies and statistical trends obtained from technical charts, they are conducting technical analysis. Here in this short read, we will mostly be talking about technical analysis.
Technical analysis
By analysing the price movement and volume on charts, and analysing the statistical trends, when someone looks for profiting strategies by buying and selling in a short period, is known as Technical Analysis. To put in simple words, Technical Analysis refers to studying price and volume pattern of stocks to identify whether they will rise or fall soon. The main objective is to profiteer in short term instead of wealth creation by holding and accumulation.
What is technical analysis?
A top-to-bottom approach can be followed to do technical analysis. Let’s simply this process with a 4-step guide:
- Prepare a watchlist of stocks – Firstly, you need to select some liquid stocks with a market capitalization of more than Rs. 3000 crores and have an ATR value of 10 or above on Daily chart. With this one can ensure that the stocks have good volatility (in simpler terms, is bought and sold regularly leading to movement in price, called price swings). Volatility is good for a trader because the degree or speed of price change (in either direction) helps to make profits while trading. Higher volatility welcomes above-average profits, but also comes with higher risk.
- Track your watchlist – Regularly, track your watchlist. Whether the stocks in radar are showing any breakout, reversal, or breakdown signals. Are they near major support and resistance points? If the volume is good? Look for signs in charts of those stocks.
- Shortlist and track – From your chart, shortlist those stocks in which you can see some major signals. Then, keep tracking those stocks. Either you will find a good trade in those stocks, or you will eventually delete those stocks from your shortlisted list.
- Risk Management – Risk management is one of the most important elements of trading. Once you find a potential trade, you need to set the entry, Stop Loss, and target before initiating a trade. To do this, check the risk to reward ratio (not less than 1:3), and then size your position according to it. Initiate a trade only after following these steps.
Are there any stock market technical analysis courses?
Now you know the steps you can follow for doing technical analysis and trading, but you might want to learn in detail how to implement the following steps. If you are interested in technical analysis and want to do learn trading, we recommend you enrol in a good stock market technical analysis course with mentorship.