A Comprehensive Guide to Technical Analysis and Different Trading Styles in the Stock Market

"Explore Different Types of Trading Strategies in the Stock Market"

From Intrahour trading to Intraday Trading, Positional Trading to Options Trading, Futures Trading to Day Trading, Swing Trading to Forex Trading, and even Cryptocurrency Trading, there are many ways to make money in the markets. 

 If you are really serious about making money from the trading then you need to learn Technical Analysis. Technical Analysis involves studying charts and using Leading indicators CPR by trading Direction to forecast future price movements.

 Intraday Trading is all about making trades during the trading hours in a day to take advantage of short-term price movements.  Best timeframe for intraday Trading is 5 Minute timeframe.

Scalping trading is a involves quick trades making many trades throughout the day. Usually Scalping is done with high volume and capture small points. Scalpers aim to profit from quick price changes, usually within minutes or even seconds, by buying and selling securities in high volume. Example in Bank nifty Option buying, scalper can order 500 quantity and aim to capture 20 points that gives him profit of 10000/- within a minute if he is successful. But it requires a high level of discipline and focus. Scalping can be used in a variety of markets, including stocks, forex, and futures. Trader need to maintain strict stop loss of 10 Points, If trade goes against you. Sometime trader increase quantity to increase their overall profit. Best Timeframe for scalping is 2 minute. A large percentage of traders that specialize in scalping trading strategy tend to be automated traders. Professional Trader utilize computerized algorithms to execute their orders or risk management tools in the market. This helps pro traders to limit their losses and gain maximum efficiency and speed, which is extremely important in the world of scalping. I will write special blog for How to do scalping ? You can mention in the comment  below on which topic you want next blogs.

Fig. 1 - Scalping of Bank Nifty on 2 minute Timeframe

In above example I have given Bank nifty chart, Initially sellers got trapped which leads to uptrend. So after retracement there is 1st scalping opportunity, to buy future, and sell at 200 EMA ( Red color line). blue color line is 20 Exponential Moving averages.

Positional Trading, involves holding positions for longer periods of time two days to weeks, in order to capture larger price movements. Positional trading involves more risk because overnight news risk involves. Hence I suggest you to do positional trading with hedging only.  Stop loss is a critical tool for risk management in all types of trading, including positional trading. But if market opens gap up or gap down beyond your risk limit then you need to face big losses. Hence I suggest to hedge positions. If you want to learn more about positional trading then join Pro Traders Mentorship Program.

 Options Trading is a way to trade the underlying asset ( stock or Index )  without actually owning it. Trading options requires answering these questions: Which direction will a stock move, how far will it go and when will it happen? You can identify the direction of the market by using CPR indicator. A call option is a contract that gives you the right, but not the obligation, to buy a stock at a predetermined price — called the strike price — within a certain time period. (Learn all about call options.) When Market goes up Call option price will increase. When Market goes down then put options price will increase. A put option gives you the right, but not the obligation, to sell shares at a stated price before the contract expires. 

Futures are a type of derivative contract for the purchase or sale of an asset on a future date at a predetermined price. Derivatives are financial contracts that derive their value from the price movement of some other financial instrument. Futures Trading involves buying and selling futures contracts that allow traders to buy or sell the underlying asset at a predetermined price and date. 

Characteristics of Future Trading: 

 Day Trading is also called as Intraday Trading, with a focus on making trades that can be closed out within the same day. 

Swing Trading involves holding positions for a few days to a few weeks, and is often used to take advantage of longer-term swings or trends in the market. Swing trading has lesser opening positions, but they drive greater profits as well as losses for traders. Swing traders strategy is to capture more points. Best timeframe for Swing trading is 1 hour time frame and daily Timeframe.

 Forex Trading involves trading currencies pairs, Good tradable forex pairs are USD JPY, GBP USD, USDCAD, USDINR, etc with the goal of making a profit from the exchange rate movements between different currencies. An Indian citizen can trade in foreign currencies only through recognized Indian brokers. Tradable pair in India are EUR/INR, USD/INR, GBP/INR, JPY/INR, EUR/USD, USD/JPY and GBP/USD. Please confirm with your broker. The volatility of the foreign exchange market offers good grounds for speculation among investors. Global FX trading hits record $7.5 Trillion a day, BIS survey

Cryptocurrency Trading involves buying and selling digital currencies, such as Bitcoin or Ethereum, with the goal of making a profit from the price movements in these assets. Cryptocurrency markets are decentralized, which means they are not issued or backed by a central authority such as a government. Instead, they run across a network of computers. However, cryptocurrencies can be bought and sold via exchanges and stored in ‘wallets’. Hence I suggest you to avoid trading in the cryptocurrencies, Instead focus on Indian Stock market.

Trading For Success

Intraday trading is best suited for fast thinkers who can make quick decisions and process information quickly. You need to be able to stay focused and alert for extended periods and react to market fluctuations quickly. The ideal personality for intraday trading is person who is disciplined, analytical, and able to handle emotions like Fear, stress and greed.  You should have a deep understanding of technical analysis. 

 To be successful in any form of trading, you or any trader need to have a proven and tested trading plan, which includes entry and exit points, risk management strategies which suits for your capital, and profit targets. Trader should also be able to adapt or change and adjust strategies as per market scenario.

With the right strategy, approach and mentor you can learn and can succeed in the world of stock market trading.

Which type of trading do you prefer, write below!

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Summary : 

Technical analysis with CPR and Pivot Points are important in trading, and stop loss is a critical tool for risk management. Scalping trading is a quick trade strategy that aims to profit from quick price changes. Positional trading involves holding positions for longer periods of time. Futures trading is a type of derivative contract that allows traders to buy or sell the underlying asset at a predetermined price and date. Day trading, swing trading, forex trading, and cryptocurrency trading all have their own unique characteristics and strategies.

Best Books for Intraday Trading and Technical Analysis.

Thank you !