Wednesday, 16 September 2015

How to trade effectively in Stock Market: For Beginners

How to trade effectively in Stock Market: For Beginners - Money Classic Blog
Out of the various ways of trading like technical analysis, fundamental analysis and strategy based trading. The strategy based trading is the method which is followed by a lot of traders. Also if the trader is a beginner and has not enough knowledge about the stock market he can take the help of some advisory firm. These advisory firms provide accurate stock market tips to help the trader to trade effectively and generate profits from the trade.

Some of the important strategies that the intraday traders follow are:

1) Firs Hour Breakout Strategy.
2) Gap Strategy.

In first hour break out strategy, firstly the range of the trade in the first hour is observed. The high and low of this range are noted. Then after one hour subsequent trade is watched to have a breakout from the range. If the breakout is from the high an up trend is observed. On the other hand if the breakout is observed from the low a down trend is observed. The market is anticipated to trade in these directions of uptrend and down trend.

In the gap strategy first a gap is identified. A gap is the difference between last day’s close and next day’s high. This gap can be positive or it can also be negative. The gap can be small as well as large. Depending on the type of gap the future trends are anticipated. Various buy and sell signals are initiated based on this gap. The gap technique is a powerful strategy to trade and has given positive results in the past.

With whatever strategy the trader follows, he must always use proper stop loss to trade. A proper stop loss prevents the trader from incurring heavy loss. When the stop loss gets triggered, the trade gets exited and limited loss is incurred.

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