Money Management is an
important tactic which can be used in conjunction with the general estimation
of the price movements. The technicalanalysis can be used to predict the general direction of the price
movement.
For example the
following tactic can be used:
1) Use the
technical indicators like RSI to determine the overbought and oversold levels.
The value above 70 will indicate an overbought level and the value below 30 are
considered as overbought level. Thus appropriate trend reversal opportunities
can be found and buy or sell calls can be placed.
2)
The signals from
the RSI should be confirmed with MACD or Parabolic SAR. MACD stands for moving
average convergence and divergence. The moving averages of two different
periods one small and other big are watched for crossovers. Thus appropriate
buy and sell calls can be placed confirmed with both RSI and MACD. Similar to
MACD the Parabolic SAR can also be used to confirm the trend and place the buy
and sell calls.
3)
Once the buy and
sell calls are placed the money management can be used to cover the losses if
any. For example if a buy call is placed and the price goes down, a sell call
should be placed with increased quantity. Thus if the price continues to go
down it will cover the loss and will add to the profit. The process can be repeated until the trade
goes in the trader’s favor. The similar process can be repeated if a sell call
is placed in the start.
The above tactics can
be used with stock market tips provided by the advisory firms. They provide accurate intraday trading tips and
equity tips with proper stop loss. MoneyClassic Research is one such advisory firm which is reputed and is also
SEBI registered.
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