Sunday, April 21, 2013

Market Stock Trading Trend

In case you are getting frustrated with trading a market which seems illogically volatile, then you should be reading this. It will give you insights to Market Stock Trading Trends that you can easily identify and make quick profit. But then in doing so you need to be nimble footed, you need to quickly take decision to enter the market with a stock futures trade, and without getting too emotional you should as quickly move out of the trade.by way of taking profit off the table. That is easy said than done, until you learn to identify such market stock trading trend. So here I am going to help you identify such trading trends in the ensuing paragraphs. Here we go!

Market Stock Trading Trend

Even when the market is not showing any long term or medium term trend, that is when the market is not trending, you will find smaller trends in the short term. Basically these trends are due to Wave nature of the market movement and can be profited from in near term trading. Let us first understand few basic principles of Market Stock Trading Trends :-
  1. Any market movement will take place in the form of Waves.
  2. These waves move up in five steps in Bull Run, and conversely move down in five steps in Bear Run.
  3. Movement of waves in five steps upwards means that the first step will go up, second step will come down but not below the low of first step, third step will go up higher than the high of first step, fourth step will come down but not lower than the high of first step and fifth step will either go higher than third step high or equal to that high.
  4. This means that for a market trending upwards, there will be three steps taking prices upwards and there will be two steps taking prices lower. Same will be the opposite case for markets trending lower.
  5. The three steps which take the prices upwards will again move in five-step waves, and the two steps taking prices lower will move down with three-step waves.
If we have assimilated this preliminary information about market movement, then we can apply this for short term trading. For identifying Market Stock Trading Trends in the short/near term in a daily stock chart, follow the instructions given below :-
  • See the daily chart of a stock and try and identify whether the short term trend is up or down.
  • If it is up then identify whether the third step of the wave has started or not.
  • Catch the third step of the wave as it begins and buy the stock. Remember the third step of the wave is generally the most profitable with minimum risk. This step will take the prices higher than the high of first step as discussed earlier.
  • As the prices go higher than the high of first step, keep a trailing stop loss and go with the price movement. As the price moves higher, move your trailing stop loss higher, till you are stopped out. This your your exit.
  • Since you are looking for very short term profit, trade with stock futures so that you can get a leveraged profit, which can be substantial. In terms of Return on Investment, your profit should be averaging 25% in 4/5 trading sessions.
Hope you have got some useful insights into Market Stock Trading Trends and can use this information to profit in this market. Always use your stop loss after entering any trade. In later posts I will be giving you tips on Swing Trading Indicators so that you can enhance your prowess in Market Stock Trading Trends.