As a day trader, what information do you use to pick your stocks?… Intraday trading is more risky if you are untrained. but, if you have an eye for spotting market trends, you can make a neat pile in quick intra-day deals. To succeed in intra trading technical analysis plays an important role
Technical analysis is done on the basis of historical price movement plotted on a two-dimensional chart. chart reading is a definite skill and if you want to be a good day trader, then you will definitely need to putin some serious screen time.
It takes a lot of practice to become adept atreading charts and I believe the most important aspect of this is watching howthe charts react to certain events.
This is what I have had the most successwith during my time, and in my mind, this is the key behind predicting futureprice moves..There are many parameters to analyse market using which you have to arrive at your own methods to decide which parameters suit you the best.
1.Moving Average:
You simply have to plot the 200-day moving average on theprice chart. When the price of the stock rises above the moving average line,it’s a buy signal, and when the price falls below the moving average line, itis a sell signal. One can also look the 50-day moving average or the 10-daymoving average.
2.Trend Line:
Trend lines are an important tool in technicalanalysis for both trend identification and confirmation. A trend line is a straightline that connects two or more price points and then extends into the future toact as a line of support or resistance. A proper trend line has to connect twoor more peaks or troughs.
- Uptrend line: An uptrend line has a positiveslope and is formed by connecting two of more low points. The second low mustbe higher than the first for the line to have a positive slope. Uptrend linesact as support and indicate that net-demand (demand less supply) is increasingeven as the price rises.
- Downtrend line: A down trend line has a negativeslope and is formed by connecting two or more high points. The second high mustbe lower than the first for the line to have a negative slope. Down trend linesact as resistance and indicate that netsupply
3.Pivot Levels
The pivot is the most important level. When the market isabove the pivot it’s a bullish signal and when the market is below the pivot,it’s bearish. Accordingly, some traders will only buy when the market is abovethe pivot, and they will only take short trades when the market is below thepivot.
There are several different methods for calculating pivot points, the most common of which is thefive-point system. This system uses the previous day’s high, low and close, alongwith two support levels and two resistance levels (totaling five price points)to derive a pivot point.
Use the above parameters to analyse the market and makemoney in intraday trading.Thanks for reading!
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