How to Boost Your Trading Skills through Technical Analysis
With more and more people investing in the stock market, the number of traders is increasing in leaps and bounds. However, the rate of increase of successful traders is not that steep. This is because most traders in India, as well as abroad, do not trade smartly.
The basic misconception most traders have is that spending more and more time dealing with their stocks and being a full-time trader is the key to successful trading and maximum profit. Sadly, the real scenario is not so. The secret to successful trading with maximum profit margins is to develop right trading psychology and use the right technology tool for trading decisions.
But now the question arises that is a mere application of technical knowledge enough for right trading? The answer is no. Had that been the case then there would have been no unsuccessful traders.
The proper knowledge and right trading decisions are what takes to be a good trader.
There are some secrets about trading through technical analysis:
- Use at least two indicators- Using One technical indicator is better than none, but using the second indicator for being sure of the odds of being right of the first is the best. However, limit it to just two. Do not overdo with indicators, as managing and tracking many of them will not be tiring and hectic but also tricky.
- Understand the indicator’s crowd sentiment- No indicator measures everything. While the indicator measures the trends of the market, it overlooks other aspects of trading. So it is important to keep in mind the indicator’s aspect so that all other factors can be kept in mind separately.
- Make use of multiple time frames for confirmation- always use different time frames to confirm the buy or sell signal. Put the same indicators in different time frames, such as 15 minutes, hourly, daily, weekly or even yearly and check the signals generated for surety.
- Trade with the trend- It is always safe to Trade with the trend. Going against the trend can generate better revenue sometimes but has high-risk factors associated as well. So if you want to trade safe then if the indicator is trending upward, buy your stocks. When it stops trending upward, sell it. If you are unsure of what is going on, it is always advisable not to trade.
- Forget the saying that “market timing doesn’t work”- Only a handful of traders who lost themselves are believers of the saying that “market timing doesn’t work”. Ignore them completely. Market timing is the important factor while trading, the entry and exit timings are very important as they decide a big portion of your profit margins.
- Plan every trade – it is useless to trade without a profit target. It is basically investing your money for no good. If you do not see any prospect with the stocks then it is better not to invest. As such trades not only blocks your money but also make your overall trading pattern slow.
- Understand loss is a part of the show- Do not trade if you are afraid to lose. Sometimes it is wiser to get back your money with a minimum loss from stagnant stocks so as to invest it in stocks that will give you high-profit margins in lesser time. The loss incurred in such a process is not actually a loss rather a depreciation for a better profit. One needs to understand and develop such trading psychologies with the help of technical analysis for boosting one’s trading skills over time.
- Lastly, Choose the Indicators Wisely- understand your trading type and choose your indicator accordingly. Numerous indicators are available in the market but not all will serve your purpose. So take help from experts or make use of your experience to choose the best indicator for all your technical analysis and decisions.
With more and more developments new trading technologies, indicators and ideas keep on developing every other day. But one needs to understand which technology and technical analysis indicators suit him or her the most. He or she needs to identify and apply it accordingly. Maintaining these few healthy trading disciplines increases the trader’s chances of making extraordinary profits.