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Sunday, June 15, 2008

Day Trading Techniques

Day Trading Techniques

1. Buy near open price
If possible try to buy shares below open price, or at open price. Don’t buy shares if price is gone very high then open price, wait for the price to come down near open price and then buy that stock.

2. Check buying volumes
Before buying check out the buying and selling quantity (volumes). If buying volume started increasing then the stock may go up.

3. Check derivative status
If possible try to check out the derivative of the stock which you want to buy. If derivative of that particular stock is going up with increasing buying volumes then you can immediately grab (buy) that share/stock. Most of the time it is seen that if the derivative goes up, then its stock or share also goes up.

4. Wait for the target price to buy
For example, if buy is given at 150.5 then don’t buy below this price, only buy at 150.5 price or slightly higher then price. Because the given buy price may be the resistance price, if it breaks then share price goes up or else may not go up above 150.5. So plan to buy at given targeted price, don’t buy below target price.

5.Strictly maintain Stop Loss
Strictly maintain the given stop losses. This will help you to prevent from huge loss. Suppose, for moment the share/stock what you bought falls drastically down, then you may end up with huge loss. So always maintain given stop loss. “Stop Loss will reduce your loss”.

6. Down wait for huge profit in single share/stock
If you are getting some profit and if you notice that is not further moving up (it’s called consolidation) then you have to sell your share/stock and come out of that trade. In this manner, you can earn small profit instead of loss then you can do another trade and again earn small profit. Likewise if you keep earning couple of small profits in a single day then all your small profits will add up to huge profit amount in a single day. “Get satisfied in small profit and do multiple trades".

Posted by: Srikanthbabu Kaliki

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