Disclaimer: No prerequisites needed to understand these strategies. It will be useful for all kinds of traders (Intraday/ Swing/Long Term).
When you are investing in stock market, it is suggested to perform Stock Analysis otherwise you are likely to lose your money.
Analysis of financial markets is either fundamental or technical. Fundamental analysis focuses on financial statements in assessing the condition of a company and in predicting its future performance. The problem is, there are more than 7000 companies listed in India, it is almost impossible to read balance sheet/PL statement/Cash flow statement of all, but no worries, these 10 tools will help you analyse the stock fundamentally in less than 10 minutes.
Technical analysis focuses on a stock’s historical price pattern, as portrayed on charts, to predict future price movements. You must have seen people sitting in front of the multiple screens and make trades based on chart.
Today we will learn top 3 strategies of Technical Analysis with highest accuracy rate.
Strategy 1: Moving Average with Death and Golden Cross
Moving average is defined as 'average price of closing prices of the stock for a definite period of time'.
a) When stock price crosses above the moving average line the stock becomes BULLISH and it is a BUY SIGNAL. When stock price crosses below the moving average line the stock becomes BEARISH and it is a SELL SIGNAL.
(Step by step video is at the bottom of the article)
b) When Short Term Moving Average line crosses above the Long Term Moving Average line the stock becomes BULLISH and it is a BUY SIGNAL. When Short Term Moving Average line crosses below the Long Term Moving Average line the stock becomes BEARISH and it is a SELL SIGNAL.
Strategy 2: Commodity Channel Index (CCI)
About CCI: Commodity Channel Index (CCI), Developed by Donald Lambert, CCI is a momentum-based oscillator used to help determine when an investment vehicle is reaching a condition of being overbought or oversold. It is also used to assess price trend direction and strength.
a) CCI favors the BULLS when it is Positive. (Above zero level)
b) CCI favors the BEARS when it is Negative. (Below zero level)
i.e. When CCI line crosses above zero level then 'Buy' the stock and when CCI line crosses below zero level then 'Sell' the stock.
Strategy 3: . Moving Average Convergence Divergence (MACD)
About MACD: Moving Average Convergence Divergence (MACD) is a trend-following momentum indicator that shows the relationship between two moving averages of a security's price. The MACD is calculated by subtracting the 26-period Exponential Moving Average (EMA) from the 12-period EMA. The signal line is a 9-day EMA of the MACD line.
a) MACD line rises above the signal line, the indicator gives a bullish signal, which suggests that the price of the stock is likely to experience upward momentum.
b) MACD line crosses below the signal line, the indicator gives a bearish signal, which suggests that the price of the stock is likely to experience downward momentum.
You can learn 13+ distinct strategies here
For Hindi viewers, here is the detailed explanation:
Hope it was useful. Happy Investing!
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Research Analyst (SEBI Regd.)
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