How to decide which sector is best for stock trading( Sector Rotation)
If you are a newbie, Sector Rotation term could be new for you. But, most of the successful traders are already familiar with the sector rotation. In this article, we are going to introduce you with Sector Rotation and how can you decide which sector would be best for your trading system.
What is Sector Rotation
In simple language, It is movement of one trend from one phase to other.
We all know, Market runs in cyclic nature and there are almost 10 different type of sectors in the Stock market like FMCG, Power, Telecom, Banks, Real estate etc. When any of Bull/Bear market starts in share trading, It starts sector wise. If we talk about current scenario, Pharma industry is in bullish phase. Around 1 month before, Power stocks were in bullish phase. Movement of Bull/Bear phase is known as the sector rotation and you have to also move your stocks to participate in the rally and become a profitable trader. This movement is applicable to those who do Positional or Day Trading. Traders who invest in the business have no concern with Sector Rotation Trading.
Which sector to decide for Day Trading
As we already told you, Stock Rotation is the movement of the trend and there are more than 15 sectors in the Indian share Market. You can predict trend from the nifty movement. There are different type of nifty index related to different market like Pharma Nifty, Bank Nifty, IT nifty etc. You can check the trend from their nifty movement.
Why we are asking to confirm movement by Nifty because Nifty can-not be manipulated by operators
If there is a good movement in the particular nifty, It means that Market will be remain in active phase and Active market is best for making money by the Day Traders. In active market, You can get big movement exposure.
Imp. points to take care before finalizing Sector trading
- Make Sure, No big economical/financial news is about to come for that sector.
- Make Sure, No big result of that sector is about to come.
- Don’t enter in trade only on basis of news. Cross check your Facts/News.
That’s how you can do trading in different different sectors. Good Luck for your day trading.