Which Indicator is best for Share Market Trading
Lots of work is done by the chartered accountant firms to create balance sheet of big companies from which we finalize P/E ratio, Face Value ratio, P/C, EPS etc. But, it is not for use for the Technical traders; Traders who do trading based on the Charts, Moving averages, Indicators etc.
When you will start your career as share Market trading, You have to understand many of the indicators to get a view of any share chart. Problem will come during trading that you will be get confused which chart to use and which chart/Indicator will be best for you whether you are doing day trading or investment trading.
Every trader’s have different philosophy to use difficult indicator to confirm Buy/Sell Price. You can’t learn every indicator and get best in it. You have to be master in any one indicator and finalize your trading. Now, Question comes how can you be so sure that this chart will be best for you and you can master of trading by learning ABC of this chart.
Focus on Signals given by the Chart
Biggest mistake is done by the new trader that we start trading of share without checking the fundamentals. We know fundamentals are meaningless for technical trader. But, It doesn’t mean that you start trading on the shares who are too much volatile and changes 15 to 20 % on the basis of single news. So, it is better to do trading in share market on Top 50/100 stocks of particular sector or Top 50 Nifty Stocks.
You can get Sell/Buy signals of any share price from chart in 4 steps:
First, check what is the momentum of the stock whether it is going bullish or bearing. You can check the pattern of stock by MACD Indicator and RSI Indicator.
Secondly, check whether it is going accordingly its trend or not. For this, check last 50 or 200 day moving averages and If it is breaking its previous moving averages, it means It is going accordingly its trend.
Thirdly, Check volatility of stock. It means how it is moving accordingly to market. If it is going with the market trend or against the market trend. It can help you to determine the fluctuations of the share price for the day. Bollinger Bands are the best to check the volatility of the stock’s range. If stock is breaking its range, it will help you to predict new High or New low of the share.
Fourthly, Now study the chart of share. If you are day trader, you can stats of chart for last week otherwise depends upon your trading style. Charts help you in determining the volume movement of stock, break out and bottom down of the stock.
Combination of chart to get the signal for day trading
Most of traders get master in study of one type of chart and they use only that chart to determine Buy/Sell price for their trades. If you are new trader and you are trying to determine signal for price by using 2-3 charts at the single time, You will end up in garbage. Because, all charts provide signals near to each other and there will be bias if we will mix up the indicators and it will be a bad trade.
Key to successful trading is to be master of any proper chart and believe on your signals.
What is my Strategy to find trade signal in Share market trading
- Confirm Strength of Stock by RSI Indicator whether it is overbought or Oversold.
- Check volatility of the stock by Bollinger Bands.
- Now Compare, 50 or 200 Mean day averages and confirm the trend.
- Finalize your signals by looking at chart.
In Short, Trading is all about to find the entry price and exit price by learning the charts. You will come across many of the charts to find out the signals & picking one from many of the charts is your key to become successful Profitable Day Trader. There is no particular indicator which is best for Share Market Trading, It all depends upon you how you use that chart/Indicator