0 Liquid Funds – A Comprehensive Step By Step Blog Guide

 

 mutual fund categories in the Indian Mutual Fund Industry.


Introduction

Most mutual fund investors comprehend the advantages of diversification and a long-term technique. But it’s valuable to have money at hand for surprising short-term events or economic crises. This is where liquid funds prove to be effective. Rather than letting excess money rot in a savings bank a/c, investors like to park their surplus money in liquid funds. Liquid funds are learned to provide returns of up to 7-8%, which is greater than a savings bank a/c known to have an interest rate of 2.5-4%.   


  


What Are Liquid Stocks?

These are stocks you can trade without substantially influencing their price. You can handily enter and exit. And the quoted stock price is near to the price at which your trade orders will fill. Liquid stocks have steadier charts. Each one-minute candle has a body. There are no razor-thin candles or long gaps between candles with no trend. Greatly low-priced and penny stocks aren’t liquid … We name these as -"illiquid stocks".

According to SEBI’s meaning of liquid funds ,these funds can only capitalize in Debt and Money Market securities with a maturity of upto 91 days. And this very description makes liquid funds excellent to park money for the short term or to develop an emergency fund or as a choice for the savings account.


How does A Liquid Fund function?

A liquid fund is a category of debt mutual fund that can give nice returns than a bank saving account or fixed deposit.

 

The fund manager invests your wealth in a combination of fixed income instruments and debt securities like:

 

·         Corporate Bonds

·         Treasury Bills

·         Commercial Paper

·         Debentures

·         Government securities

·         Certificates of deposit

How corporates utilize Liquid funds?

Many corporates like liquid funds to park their treasury money since the major purpose of investing this amount is -"Capital Protection".

Retail Investors

·         Although liquid funds are frequently utilized by corporates, many retail investors are however too pleased with a conventional savings account or FDs to look for great generating substitutes. And with debt funds encountering heat in recent times due to the IL&FS defaults and identical to such problems, retail investors have factual reservations when it comes to debt funds.

 

·         But Investors believe that acquainted decision-making is the most significant step towards a profitable investment journey and considerable liquid fund returns. And today we will attempt to lay down some facts associated with liquid funds which we speculate will assist you in deciding whether liquid funds are desirable for you.

 

 

Why Is Liquidity crucial for Trading Stocks?

Nothing is alarming than being in an illiquid stock and watching it plunge 10% on the subsequent. And that drop isn’t because of any unfavorable news. It’s because there aren’t sufficient traders to keep the price rolling smoothly. When stocks aren’t liquid, the price might take minutes or hours to shift. Since there aren’t sufficient traders to keep things liquid, the price hops a lot on each trade. If a liquid stock is trading at $10, you can exit(sell) relatively near to that price — $10.10 for example.

Still, if an illiquid stock is trading at $10, you can end up exiting relatively far from that price — $11, for example. That sort of slippage can suggest your losses rack up rapidly. That risk isn’t worth trading illiquid stocks over a lengthy duration. Don’t trade illiquid stocks! They’re chaotic, have huge spreads, and are tough to get in and out of. When you assess illiquid stock charts, it’s powerful to see intraday chart patterns or support and resistance phases too. It’s almost smart trading to bet to liquid stocks.



 

How to Specify Good Liquid Stocks for Trading

Be aware that trading good liquid stocks is crucial in maintaining portfolio consistency. You don’t need to be chopped around each tick. Stock liquidity boosts when stocks are heated and unstable. And it vanishes when they cool off and become less unstable. And hardly because a stock is liquid today doesn’t imply it will be in the future also. Interest in stock can fade rapidly. So you have to understand how volume might reduce with time. A stock that was liquid a week ago might not be liquid today.


OTC Stocks

·         You’ll usually discover illiquid stocks in the OTC markets. We hardly trade them since we like listed stocks. But it’s critical to be familiar with the in case you do. Even when an OTC stock is extremely liquid, it can have liquidity problems during huge price trends. For example, it can be rigorous to sell during a global pandemic like corona and hard to purchase during a market squeeze.

 

·         Sometimes it might take few moments to complete your order. And there will be a huge spread to boot … It’s a cold deal when moments count. OTC stocks will be sluggish to implement even if they’re as liquid as a listed stock.

 

·         It’s crucial to be very critical when trading OTC stocks. Always utilize  Level 2 quotes when attempting to time a trade during an economic compression or anxiety.

 

How Is Stock Liquidity computed?

Stock liquidity is assessed utilizing volume. Volume is how many shares are traded. More volume means more liquidity. You’ll discover liquid stocks will generally have shorter spreads too. Let’s look at how you can estimate stock liquidity.


Extrapolating Volume

·       Sometimes you want to distinguish a stock’s current volume from the last trading day’s volume. But the volume at the advent of the day is commonly a lot less than its cumulative volume at end of the day. So to figure out a stock’s cumulative volume at the end of the day, you have to extrapolate how much more volume it could bring about. Keep in mind, premarket volume is normally lower than traditional trading volume. And the initial hour’s volume is normally considerable of the day.


Dollar Volume

· While volume indicates how many shares were traded. We usually want trade in terms of dollars. After all, our trading account is gauged in terms of dollars. So, another manner to estimate stock liquidity is dollar volume. This provides us a promising idea of how many dollars were traded. It can be a more precise indication of how stock liquidity associates with actual cash. Dollar volume indicates how many dollars were traded over the day.

·    a rough calculation — you can normally contemplate stocks over $10 million daily dollar volume as a liquid. These are extra likely to be susceptible to enter and exit. But stocks that close to $10 million might still be wild and not as steady. I think it’s wise to look for a dollar volume much than the $10 million levels.

·         Keep in mind, you never need your trade to move the market relatively. So strive for an ultimate position size of 1% of the dollar volume in the stock. This is particularly valuable with low-priced stocks that appear liquid. But because their rates are low, so is their dollar volume.

 

Dollar Volume Calculator

Current Dollar Volume = Current Daily Volume x Current VWAP

Dollar Volume = Total Daily Volume x Closing VWAP

VWAP stands for a volume-weighted average price. It’s the average stock price throughout the whole trading day. Many trades at a specific price will move VWAP toward that price.

 

 

Are Liquid Stocks Promising for Share Market Trading?

While you should only trade in liquid stocks, let us tell you not all liquid stocks are promising for trading. Huge proficient is needed for trading in liquid stocks. Stock liquidity is only a part of the puzzle. You gotta contemplate the whole puzzle and make a case for the stock. Is there an impetus? Is liquid stocks a hot pick? Do they follow a favorable pattern? Is it the right time of day to trade in them? By asking all these questions to your broker you can get to know more about liquid stocks and thus you will discover only the best liquid stocks to trade.

 

 

Time of Day

Premarket Hours

Premarket trading arises from 4 a.m. to 9:30 a.m. . It’s usually much less liquid than normal trading hours. You can see premarket action to get a sense of potential trading tips You’ll see some liquid premarket runners that seem to look incredible, but then they end up receding the rest of the trading day. It’s simple to get FOMO and think you should get in before the market clears for a head-start. But I would avert these trades at all expenses.

Wait until after 9:45 to trade a liquid stock. That can assist you to avert crucial price swings in the open day trade. But watch the price activity. Let the liquid stock prove itself.

 

Examples of Liquid Stocks

 

Tesla Inc. (NASDAQ: TSLA)

Tesla has been one of the heated stocks in the market this year. But here it’s presently in a term of consolidation. This stock is incredibly liquid. Its chart is steady, even from premarket at 7 a.m. There’s a significant volume on every 1-minute volume bar. You can detect the raised volume in the initial hour and last hour of regular market trading hours. The cumulative volume for the day was 29.23 million shares. And the cumulative dollar volume for the day was $12.6 billion.

Electra Meccanica Vehicles Corp. Ltd. (NASDAQ: SOLO)

SOLO was an incredible stock during the summer months. But it’s been centralizing for a while. It was relatively illiquid in the morning, but it picked up the volume into the culmination. Note how rough and illiquid premarket and after-hours are. The cumulative volume for the day of this stock was 5.65 million shares. The cumulative dollar volume for the day was $14.4 million.


CytoDyn Inc. (OTCQB: CYDY)

CytoDyn is an amazing  OTC in the share market. But it seems to be down trending. Note again how uneven the price action of this stock is.

Some moments don’t have any trades. These lack volume bars and have razor-thin candles. Unless this stock stimulates more volume, it’s too illiquid to trade. The cumulative volume for the day was 1.79 million shares. The cumulative dollar volume for the day was $5.9 million.

Advantages of Liquid Mutual Funds

Advantage #1: Low maturity period

Investors like liquid funds for the brief term because these funds have a typical maturity duration of 91 days.



 

Advantage #2: Lower fluctuations

The brief maturity duration assures that the fund is less likely to be influenced by interest rate instabilities.

 

Advantage #3: Better stability

More frequently than not, liquid fund returns are very reliable since the short-term securities don’t differ much as differentiated to long-term bonds.

 

Let’s look at the goals of liquid funds at a glance:

 

·         No entry load

·         No exit load

·         High liquidity

·         Lowest interest rate risk

·         Better returns than bank a/c

·         Higher returns than bank FD

·         No lock-in period

Advantage #4 Tax-free dividends

Liquid funds are moreover deemed to be the stablest mutual fund investments accessible to an Indian share market investor. 

 

Are A Liquid Mutual Funds Taxable?

You won’t be accountable to pay taxes on the profits that you earn from your liquid fund investments. Still, you will have to reimburse capital gains tax. Whatever dividends that you earn is recognized as capital gains. These gains are taxed based on the period of your investment (holding period).

 

Conclusion

Stock liquidity is a significant indicator of whether a stock is tradable or not. Even if the setup is there, if the stock isn’t liquid enough — it’s not worth trading it. It’s crucial to understand that either stock is liquid enough … or it’s not. And it’s better to completely avoid the trade if it isn’t. Even if it figures, it’s not worth the risk. There will constantly be an extra ideal stock ultimately.

 

There are many problems in trading in liquid stocks — massive, chaotic price movements, high spreads, and strong executions. All those justifications should be sufficient to stay away! Trading liquid stocks is significant to discovering your market stride. It’s essential to be conscious of stock liquidity so you can discover the best stocks to trade. Liquid stocks manage to have the hugest and best results. So keep a sharp eye on the trading volume and make sure to concentrate on the most popular liquid stocks!

0 Stock Trading: How to Begin, How to Survive | Trend Gurus

 

Learning how to invest in stocks can be a rewarding way to build your wealth.


Introduction

Investing in stocks can be a profitable way to build wealth over time. Understanding how to invest prudently and with forbearance over a lifetime can generate returns that far outpace the most reasonable income. Almost every member of the Forbes 400 wealthiest Indians made to the list in 2020 because they owned a huge block of shares/stocks in a public or private corporation.



It all starts with knowledge of how the stock market functions, what your investment objectives are, and if you can deal a lot or hardly a little bit of risk.

What Is a Share Market?

A guide to the stock market for amateurs is inadequate without communicating what a share market is, to start with. A share market is a niche where shares are publicly issued and traded. A share serves as a document that assesses your ownership in an organization, and you can sell this document to others. A share market is a niche where buyers and sellers confront this trade of documents. To promote the exchange publicly, a proper marketplace has been developed for investors to purchase and sell their shares on. Now let's talk about investing in stocks for amateurs.


How To Invest In Stock Market For Beginners?

The main element in a stock market guide for beginners is the various mean by which one can invest wealth in stocks publicly listed on the stock market. For this, the following requirements are critical.

Documents needed For Investing In Stocks-

·         Your PAN Card

·         Your Aadhaar Card

·         Your name on a canceled cheque from your functional bank account

·         Evidence of your residence based on a list of documents that have been approved by your broker, depository participant, or bank

·         Documents detailing that you receive an income

·         Passport-sized pictures of you

What Are Stocks?

Stocks are equity investments that depict legal ownership in an organization. You become a part-owner of the organization when you buy shares. Companies issue stock to raise capital, and it comes in 2 variations: common or preferred. Common stock allows the stockholder to a proportional share of an organization's revenues or losses, while preferred stock comes with a predetermined revenue payment.

Investing in Stocks

·       You can profit from acquiring stocks when the share price boosts, or from quarterly dividend payments. Investments grow over time and can generate a substantial return due to compound interest, which enables your to start earning profits.

·         For instance, you might make a preliminary investment of $1,000 and you plan to add $100 every month for 20 years. You'd come out with $75,457.50 after 20 years, even though you only provided $25,000 over time if you notice an annual return of 10% interest.

 

·         Benjamin Graham is recognized as the father of value investing, and he's exhorted that the substantial money in investing will have to be made—as a maximum of it has been in the past—not by purchasing and selling, but from acquiring and holding securities, receiving interest and incomes, and benefiting from their long-term boost in value.

 


Why Stock Prices differ?

·         The stock market functions as an auction. Buyers and sellers can be people, businesses, or governments. The rate of a stock will go down when there are further sellers than buyers. The rate will go up when there are extra buyers than sellers.

 

·         An organization's performance doesn't rapidly impact its stock price. Investors' reactions to the performance determine how stock rates fluctuate. More people will want to own the stock if an organization is performing well, accordingly steering the price up. The opposite is valid when an organization under-performs.




 

Stock Market Capitalization

A stock's market capitalization (cap) is the amount of the aggregate shares outstanding multiplied by the rate of the share. For instance, an institution's market capitalization would be $50 million if it has 1 million outstanding shares priced at $50 each.

 

Market cap has additional significance than the share price because it enables you to assess an organization in the context of similar-sized organizations in its industry. A small-cap organization with a capitalization of $500 million shouldn't be correlated to a large-cap organization worth $10 billion.

Corporations are commonly grouped by market cap:
 

·         Small-cap: $300 million to $2 billion

·         Mid-cap: Between $2 billion and $10 billion

·         Large-cap: $10 billion or more

Stock Splits

A stock split occurs when an organization boosts its cumulative shares by dividing up the ones it presently has. This is commonly done on a 2-to-1 ratio. 

For instance, you might hold 100 shares of a stock priced at $80 per share. You'd have 200 shares priced at $40 each if there was a stock split. The volume of shares transform but the all-around value you own stays the same. Stock splits happen when prices are boosting in a way that deters and disadvantages small-scale investors. They can moreover keep the trading volume up by developing a bigger share pool.

Stock Value vs. Price

An organization's stock price has nothing to do with its price. A $50 stock could be more useful than an $800 stock because the share price tells nothing about the company.

The connection of price-to-earnings and net assets is what specifies if a stock is overrated or undervalued. Organizations can keep prices artificially high by never completing a stock split, yet not have the underlying foundational assistance. Make no hypotheses based on price alone.

 

What Are Dividends?

Dividends are quarterly payments that organizations release to their shareholders. Dividend investing cites portfolios comprising stocks that always issue dividend payments throughout the year. These stocks generate a dependable passive income surge that can be effective in retirement. You can't infer a stock by its dividend price alone, still, sometimes organizations will boost dividends as a means to captivate investors when the underlying organization is in distress.

 

Question yourself as to why management isn't reinvesting some of that cash in the organization for development if an organization is giving high dividends.

Preferred Stocks

Preferred stocks are very different from the shares of ordinary stock which most investors possess. Individuals who invest in preferred stocks are constantly the early ones to obtain dividends, and they'll be the primary ones to get paid in cases of insolvency of a company. The stock price doesn't vary the way common stock does, still, so some profits can be missed on organizations with hyper growth.

 

Preferred shareholders moreover get no voting rights in organization elections. These stocks are a combination of common stock and bonds.

 

Discovering Stocks for Your Portfolio

·         Investment ideas can come from many areas. You can turn to organizations like Standard & Poor's (S&P) or different online resources that might explain to you about up-and-coming corporations if you need recommendations from skilled research services. You can take a glance at your surroundings and glimpse what people are curious about in buying stocks, also you can spend your time searching investment websites that sound appealing to your investment portfolio

 

·        Look for trends and for the organizations that are in a position to profit from them. Keep an eye on the hallways of your share market world with an eye for what's arising. Ask your family members what products and services they're most curious about and why. You might discover alternatives to invest in stocks across a broad range of enterprises, from technology to health care, FMCG, Banking, finance, etc.

 

·         It's moreover crucial to contemplate diversifying the stocks you invest in. Evaluate stocks of various organizations in numerous industries or even a mixture of stocks for companies with various market caps. An actual better-diversified portfolio will have additional securities in it, too, like bonds, ETFs, or commodities.

 

How to Purchase Stocks?

·       You can purchase stock promptly utilizing a brokerage account or one of the various available investment apps. These platforms provide you the alternative to purchase, sell, and store your purchased stocks on your home computer or smartphone. The mere disparities between them are primarily in expenditures and accessible resources.

 

·         Both conventional brokerage organizations like Zerodha and newer apps like Robinhood or Webull give zero-commission trades from time to time. That makes it plenty simpler to purchase stocks without the concern of commissions consuming into your returns down the line.

 

·         You can moreover join an investment club if you don't need to go it alone. Enrolling one can provide you more data at an adequate expense, but it takes plenty of time to meet with the different club members, all of whom may have numerous categories of skills. You might moreover be required to fuse some of your funds into a club account before investing.


Utilize Your Retirement Account


1. Another means to invest in stocks is through your retirement account. Your employer might give various retirement plans as a portion of your benefits package. These accounts invest your wealth for retirement, but your investment alternatives are commonly restricted to the choices given by your employer and the plan provider.



2. You can also open an IRA on your own with your bank or brokerage firm if your employer doesn't give a retirement plan.



 

Selecting a Stockbroker

There are 2 categories of stockbrokers: full-service and discount Brokers. Selecting Discount Stock Brokers or Full-Service Brokers in India?

Discount Brokers

·         A look at discount brokers, we discover that they are the ones in the stock market who charge a lesser percentage as payment or brokerage. But this comes with a drawback. Such discount brokers may charge less but they moreover give their customers minimum assistance as far as trading choices and trading facilities are related. Do check out discount stockbroker surveys before paying or hiring your discount stockbroker.

 

Full-Service Brokers

 

·       Such categories of stockbroking corporations or stockbrokers give many or considerable assistance besides hardly doing the stock trading or buying and selling shares for you. Here, it must be noted that for those who need to play for a long time in the stock market, such categories of full-service brokers are often preferable as they have the aptitude and experience to research the stocks and give near right recommendations about the execution of such stocks incoming prospect.


Selling Stocks

Understanding when to sell is almost as crucial as purchasing stocks. Most investors purchase when the stock market is surging and sell when it's plunging, but a prudent investor follows a technique based on their financial requirements.

Keep an eye on the crucial market indices.

 The 3 biggest U.S. indices are:


·         The Dow Jones Industrial Average

·         The S&P 500

·         The Nasdaq

Don't be scare if the market enters a correction or a crash. These events don't verge to last very long, and history has exhibited that the market will ascend again. Losing money is never a pleasure, but it's flexible good enough to weather the storm of a down market and hold onto your stocks investments because they may surge again.

 

The Bottom Line

Understanding how to invest in stocks might take a little time, but you'll be on your path to creating your wealth when you get the hang of it. Browse numerous investment websites, test out various brokers and stock-trading apps, and alter your portfolio to hedge against risk. Keep your risk tolerance and financial objectives in mind, and you'll be able to tout yourself as a shareholder proudly.

 

 

0 Price Action Trading Strategies For 2021 | Trend Gurus

 

Learn about price action trading with our advanced guide to the best chart patterns, indicators, and strategies.

Introduction


The rates of a financial asset, such as a share, currency pair, or commodity, are crucial to trading, as eventually, it is the transition in price that generates profit or loss. Traders who select to concentrate solely on price will require to create a price action strategy that will involve assessing trending waves to demonstrate to enter or exit a position.


 

Comprehending the mechanics of price action and creating a highly beneficial price action trading strategy has the potential to be highly successful. Here, we analyze the strategies and indicators that will assist in composing this strategy.

Price action trading and swing trading arena are packed with techniques. While some stress on scalping ultra-small profits, others gaze at the medium-term. Either way – they all have 1 thing in common. That is to confess that, seasoned traders will use highly progressive technological indicators and chart examining tools.

Still, sometimes it’s best to take a step back and just look at what is in front of you actually – the trend. This is recognized as ‘price action trading’. By going back to the basics – you stand the best possibility of getting your online trading business on the right foot.



In this blog guide, we will demonstrate to you everything you need to comprehend about price action trading. By the end of the blog, you will have all of the critical tools to begin trading with the right strategies!

IS PRICE ACTION TRADING PROFITABLE?

·        A security’s price is one of the absolute indicators of prosperity — after all, price movements within the economic markets generate revenues or losses. Traders who concentrate solely on the price of an asset to make their trading decisions are utilizing a “price action” strategy, which is a crucial part of technological research.

 

·        Like any trading technique or tool, profitability Bankson how it is operated. Many profitable investors and traders have all exhibited that trading price action trading can be efficient. Still, traders that concentrate on price charts alone and do not take into account basic characteristics, such as financial indicators and announcements, may miss major events that have a dominant influence on the price of their security.

 



PRICE ACTION TRADING IS NEVER WRONG

1.If you are realizing that losing money, as a trader, one of your most significant jobs is to energetically   organize the risks by closing the trade if you require to. Billions are transacted every day through         markets, there is hardly any chance of technical errors. As such, it’s not a nice notion to speculate that     price trading can have some technical errors too.



2. As a trader, you can attain a good knowledge of risk management, which will be a very important step in becoming a much better trader in the prospect. Price action looks at every equity flow, globally, at all times, comprehensive of what the market’s viewpoint on your charts currency pair is.



3.Occasionally it might be a case of a bank trying to regulate its currency exposure. It could be a massive UK smartphone company buying cameras from Japan (currency JPY), or an insurance fund striving to restore its portfolios at the culmination of the month.

HOW TO READ PRICE ACTION?


1. Trading on price action involves evaluating trending waves and pullout waves, moreover understood      as impulse and punitive waves. A trend makes progress when the trending waves are massive than          punitive waves.



2.Traders monitor “swing highs” and “swing lows”, or the size of the trending and pullback waves, to    observe the direction of the trend. During an uptrend movement, the rules and regulations are such      that the price makes lower swing highs in price and higher swing lows. The reverse is valid during a downtrend. The troughs and peaks of stock trend lines float between lines of assistance and opposition on a price chart.




PRICE ACTION IN FOREX


Price action trading is similar across all markets, even forex trading. There are some nuances to be familiarized with though. Currencies trade 24 hours per day, yet some forex pairs are less plausible to move when their respective markets are not operational, even if a price action signal is generated. Thus, this blog also contains instances from all markets to indicate how price action trading functions, whether it be for the forex, share, index, or commodity markets.

 

HOW TO TRADE SUPPLY AND DEMAND WITH PRICE ACTION?


Supply areas are observed where sellers have arrived at the market aggressively and resulted in the price plunge, and it has not returned. Traders watch out for these because, when the price returns, sellers may however be present and prepared to sell again, lifting the price back to downward movement.



Demand areas occur where Traders have entered the market aggressively. The price mobilized and has not returned. If the price comes to that normal level, traders will be looking to see if the buyer picks up again, pushing the price to back upward trend.

 

ADVANCED PRICE ACTION STRATEGIES


PRICE REJECTION TRADING STRATEGY


Price rejection is when the price attempts to move through a critical level but then reverses path because there is not sufficient force to sustain the trading momentum. Rejections frequently ensue in tough and quick moves in various directions. Here is what to be careful for:



· Price reaching a key price area (supply, demand, or structure breakout area).

· Price closes the area or even breaks through it marginally.

· The price momentum weakens and the price moves in a different direction.

· The price trend peak commonly has a long tail.

· Price moves back the different way, giving an entry opportunity.



 

PRICE ACTION SCALPING STRATEGY

·        Scalping is a trading strategy where dividends and losses are taken promptly, as trades commonly last a few instants or less. In forex scalping, this may implicate that utilizing a 3 to 5 pip stop loss and a 5 to 10 pip target. In the stock market, it may mean jeopardizing a few dollars in a share in or order to make a dollar's cents. Scalping involves entering and exiting a position promptly to take benefit of minor price movements, for whatever a small price move is contemplated to be for that asset. Many scalpers commonly utilize 1-minute charts.

 

 

·       A scalping strategy strives to trade in the trend direction and enter during a pullout when the price turns on moving back in the trending direction. To do this, traders glance for engulfing charts to signal an entry, such as when a candle in the trending direction encircles a candle in the pullout direction. This occurs during a pullback trade.

 



PRICE ACTION STRATEGY FOR SWING TRADING


Any of the price action strategies spoken of above can be utilized as a part of a swing trading strategy. Swing traders commonly utilize hourly, 4-hour, and everyday charts to discover trade setups, although they may utilize 15-minute or 5-minute charts to fine-tune their market entries.



If you were to allow the price to enter the supply area, it would frequently surpass the prior high. If you are wishing to bet the stock, you could enter when there is a bearish and engulfing pattern or the price consolidates and then halts the consolidation to the downside. The arrow marks the breakout of the consolidation, to the downside trend in this swing trade.

 

STOP LOSSES AND SOME PROFIT TARGETS FOR PRICE ACTION TRADING


You can regulate risk by placing a stop loss on each trade you execute. When purchasing and taking a long position, a stop loss goes below the current swing low. When selecting an asset, you should place it above the current swing high. In both situations, this regulates the risk of the price plummeting too low or surging too high.

Price action traders need to close off their profit margins. This can be executed in a variety of means. One of the simplest procedures is to utilize a risk-reward ratio. For instance, if the risking $0.05 per share on a scalp trade, exit at a $0.10 profit. That is a 2:1 risk-reward ratio. For scalping, 1.5:1 or 2:1 is traditional. For swing trading, 3:1 or higher is formal, but traders can specify for themselves their needed risk-reward ratio.



PRICE ACTION TRADING SOFTWARE SYSTEM


Price action can be reviewed through various online trading platforms, Zerodha is one such platform, where all of the above technological indicators are accessible. You can make usage of all technological tools, including drawing and price forecast tools, as well as many customizable charts.



You can exercise this price analysis by enrolling for a demo account and trading with virtual funds, and when you are prepared, you can switch it to a live account to trade with real funds. It is advisable to focus on 1 strategy at a time and intent to understand it from inside and outside. One reliable strategy, if traded well, has the potential to be highly successful.

FAQs


What category of trading is price action trading suitable for?


In maximum cases, price action trading is reasonably suited for medium-to-long-term trading. This might, for instance, emphasize swing trading. Still, many would assert that day traders can moreover make entire usage of price action trading - as much of the theory stays steady.



Should I still learn technological analysis?

In brief - yes, the technical analysis should however play a crucial part in your long-term trading efforts.



What assets is price action trading applicable to?

Price action trading applies to all asset classes. After all, it is an assumption - and not a standardized procedure.



Is price action trading suitable for amateurs?


Yes and no. On the one hand, price action trading is a technique that should be used by traders of all shapes and sizes. With that explained in this blog, it can take a long time to champion price trading strategies.



Where can I understand more about price action trading?

We have named some of the most outstanding price action trading strategies in ours. Trend Guru blog just read them thoroughly to understand more.




Conclusion

All profits and losses in trading are based on price movements. Price action traders concentrate on past and current habits to make wealth off where the price may lead next. There have been many efficient price action traders, but it takes time to understand price action techniques, and spot trends, patterns, and reversals.

In brief, price action trading breaks much of the literature books into chunks – as it strives to take you back to the basics. That is to say, the theory teaches us clarity – in so far that you pay scrutiny to what is occurring in the here and now of the share market world  – as contradicted to concentrating exclusively on the past. As such, we hope that by reading our blog guide in-depth,  you now have a strong understanding of what price action trading is, and why it is critical to master in the long run of your trading journey.

 

 

 

 

 

 

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Thought of the day

"The man who has minted money with both hands in the Indian stock market says wealth is important but is not the source of all happiness.", Rakesh Jhunjhuwala

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