Understanding the stock market for beginners
- This blog you are reading is a product of 20 years’ experience as a trader explaining all of the stock market. In stock market if you want to be successful you need help and guidance. Many people learned lessons from their own mistakes. This blog will help to find the directional trading. This blog will solve many problems trades face. Here are some facts that traders may find surprising.
- Trading is difficulty
- There is high competition in stock market
- Market is highly efficient with use of latest technology and algo trading
- Therefore, it is highly difficult to find a trading setup that makes risk adjusted profits.
- It is a necessity to have a trading setup and an edge over other traders otherwise it is impossible for consistent profits.
- This blog is divided into four parts
- Part one of the blog will explain the probability theory supporting the concepts of successful trading – understanding the price pattern behavior.
- Part two of the blog will explains the trading ranges. This is the foundation of price movement therefore this part is very important and you will not find this type of information in any other blog.
- Part three of the blog will explains the trading patterns. This blog will explain the use of indicators to confirm the trade setup. The important factor of trading is how trader manage the trade size and position
- Part four of the blog is for the retail trader It explains the trading psychology and the problem of emotion control. Majority of retail traders face this problem. Retail traders are not able to understand that to become a full-time trader it is a long process. Retail traders are not prepared to make commitment for learning. Some performance improvement tool help to track your trade performance – weakness - strength. By finding your weakness and strength we can increase the probability of profits.
- In stock market there are two type of trading community. One is fundamental analyst – Technical analyst. Fundamental analyst makes their decision based on fundamental factors whereas technical analyst make their decision based up technical factors. Technical analyst believe that they have an edge over fundamental analyst because technical helps to identify the best enter point and exit point. Technical analyst believes that price action in stock can reveal the hidden news or information. Careful analysis of price action can offer an opportunity for trade and earn profit. Building a trading setup based upon
- Most of the time stock price factored all the information available. Sometimes stock price may move up or down and trader may make profit purely due to random chance. This method of trading cannot generate profit in long run because stock market is a minus sum game. Well you may hear that stock market is a zero-sum game but in actual it is a minus sum game. After the deduction of brokerage charges – government taxes it becomes difficult to generate a profit by random chances.
- New retail investors when they entered into the market, they start losing the money. It is often said and it is true the 90% of retail investors loss 90% of their capital in 90 days. When they lose all their money, they start finding their gurus on internet. There is a separate industry running for educating these type of retail investors. However, these stock marker gurus have nothing to do with trading education. They point out the retail investors psychology – emotions- positive thinking. They teach retail investors that it is your mind and emotions which is creating losses for you however if a real trader earn money from stock trading, he can earn enough money and why will someone will tell you his secret of earning money to you? There is a direct conflict of interest. Nobody in this world will share you his or her secret trading setup because if he shares his or her secret it is no more a secret and it will not work.
This is a introductory blog . This blog series is divided into 4 parts we will upload the remaining parts. Subscribe the blog and share your opinion in comment section. Please share your opinion we will implement your valuable suggestions.