5 Tips When to Buy a Stock & When to Sell a Stock

  5 Tips When to Buy a Stock & When to Sell a Stock

stock market is risky but if you can understand then that is very easy today i discuss 5 Tips When to Buy a Stock & When to Sell a Stock

________________________________________________________

TABLE OF CONTENTS

• INTRODUCTION
• CANDLESTICKS PATTERN
• MORNINGSTAR PATTERN
• EVENINGSTAR PATTERN
• HEAD & SHOULDER PATTERN 
• REVERSE HEAD & SHOULDER PATTERN 
• PIVOT POINT
• RSI
• INTERPRET PIVOT POINTS + RSI + VOLUME
• CONCLUSION

_______________________________________________________________

INTRODUCTION

top five strategies to decide when to buy and when to sell stocks completely

 based on technical analysis you might have experienced so many times that you

 buy a stock it goes up for some time maybe and then it starts its downward

 journey today we are going to try and understand what should be your strategy what

 should be your focus point so read full article 

• CANDLESTICKS PATTERN

let's start with the very first technique which is our candlestick chart patterns this is

 one of my favorite chart patterns and believe it or not whatever data i have back

 tested this has given a pretty good probability what is the probability of winning

 your trades

• MORNINGSTAR PATTERN

so what is the first pattern it's the morning star pattern  the step number one

 there has to be a downfall step number two you have to see that three candlestick

 pattern that magical candlestick pattern the very first one has to be a big red candle

 followed by a doji and followed by a big green candle so when should you enter

possibility number one some people feel that they should enter the

 moment when the third candle the green candle engulfs the first big red candle

 possibility number one

possibility number two some traders like where we want to play safe okay and

 they will wait till the third candle completely engulfs and closes above the first red

 candle so they want to be sure they say even if i enter at a little bit high price we are

 with that if your trade goes well then ideally you should see a very nice upward

 trend post the morning star button but if your trade goes against your

expectation big question is where do you place your stop loss stop loss has

 to be placed at the lowest point the lowest point is the wick of what the

 second candle which is generally a doji candle i hope you have understood this 

• EVENINGSTAR PATTERN

what is an evening star pattern now first condition is what there has to be

 an uptrend post the uptrend you should again see that three magic candlestick

 pattern what is the three magic candlestick pattern the very first one is a big green

 candle followed by a doji candle and then followed by a big red candle ideally

when can you enter again two possibilities 

possibility number one the third candle engulfs the first one or

 possibility number two let the third candle fully form

 let it close well below the first one and then we will enter the

 trade  if things go well ideally that's a classic way when you can short the

 position that's a short sale and if your trade goes wrong then where is your

 stop loss stop loss has to be placed at the highest point of the second candle i hope

  two important points 

1.  if you're interested to read more about these patterns these are known as

        typical bullish reversal patterns or bearish reversal patterns i've also

        written a separate blog on that so if you want link is given below 

   

        

        let's understand an amazing  practical application of the morning star and the

       evening star pattern this is the chart of eyeshare motors okay it's a daily

      chart here you can see how does the morning star candle formation happens

     okay so here you can see step number one is what a downfall you can see a

    big downfall and you know when the downfall  starts a normal person is like i'll be

    interested now i'll enter now i will enter and then ideally your subconscious mind

    should sing that song and when should you ideally buy is when this morning

   star candlestick entire pattern can be seen so which two types i already told

   you third engulfing the first or after the third is complete okay and here you can

  see how beautifully the stock has moved up after the morning star pattern

  right and second one was the evening star pattern and in the

  same stock you could see an evening star pattern right up on the top and you can

 see that it was such an amazing run up for

  the stock you saw those three magic candlestick patterns okay one two three and

 after this was completed after this was formed and then it started its downward

 journey i hope you have understood how the practical application should work for a

 morning star iop[]ias well as an evening star

• HEAD & SHOULDER PATTERN

well the next one through which you can understand when to enter and when to exit

 a stock is the head and shoulder pattern understood shoulder head shoulder

simple enter and stop loss so let's try and understand this practically this is a chart

 of maruti now you can see below 

this is nothing but the left shoulder then you can see a big head and followed by

 a right shoulder now can you visualize this with my shoulders and the

head so you can see that left and right shoulders are almost similar in height

and head has a higher high okay now what happens is that you can now try and

 draw a visual line joining these three points and this is called as a neck line

okay now once the neckline is broken on a downward side ideally this starts the

 bearish trend of the stock

 can i enter at this point when the neckline is broken

answer is yes 

this is where ideally you should enter the stock this is going to be a short side

so this can be done in futures not in Intraday so you can short the stock when

 the neckline is broken what can be your target now  if you want to calculate it

 precisely it's calculated something like this you have to first try and calculate

 the distance  between the neckline and the top of the head and whatever is this

 distance place it from this point to this point okay so same distance is going to

 be achieved the same target is going to be achieved below the neckline and if you

 can see here this target was also achieved very recently on third may 2021 this is

 how a head and  shoulder pattern looks like now  if you see here what happened the

 stock started going down but then it reversed from here now should i have booked

 my loss here what could be a stop loss it is generally at the shoulder point so in our

 example here somewhere here around seven thousand seven hundred  you can say

this could have been your stop loss i hope you have understood this

• REVERSE HEAD & SHOULDER PATTERN 

now moving ahead to the inverted head and shoulder pattern  now what will

 happen shoulder head shoulder analyse neck line again these three points can be

 joined shown in below chart 

and this is where the neckline can be drawn this is which type of fat pattern this is

 where your bullishness is going to be seen no what when should i enter is the first

 one the moment this neckline is broken ideally here this is where you should

 enter  price target you should be calculating it in this way this is the

 distance between the neckline and the head this distance you should add it up

 here and this is where the price target is and in chart you can see this target

 was achieved on 14th december it's an old one 2012 it's the chart of tata

 motors now your stop loss could have been this point of your right shoulder i

 hope you have understood when to enter when the neckline is broken when to exit

ideally at the target price achievement or if the stop loss is hit when is the

target price achieved that distance you have to count from neckline to the head and

stop loss is that point where your right shoulder point is made i hope both are

absolutely clear

• PIVOT POINT

 let's move on with the third indicator the pivot point indicator i'm going to tell you how to first apply that pivot point on the normal trading view chart so first i go to 

fx function  i search pivot point standard  i click that once i click that now i go to the

 setting wheels in  type drop it down and select fibonacci and then click ok once this

 is done your  levels will be set up as per the fibonacci 

what do we mean by pivot?

imagine a clock now in a clock what is the center point where all the hands of the

 clock are actually linked with so that is nothing but the pivot point so if i come back

 to the candlestick pattern this is the latest candlestick chart of maruti and suzuki

 given below 

 i hope you have understood this how to draw the pivot it was simple effects go to

 pivot point put it on the chart and then select fibonacci what do you see here p

p means what pivot r one is what resistance one r two resistance to r r3 resistance 3

similarly on the lower side you can see s1 s2 s3 will stand for support

 1 support 2 support 3 question is when to enter as per this pivot point strategy it

 is said that if you can see the pivot being strongly held okay or you can see a very

 big bullish pattern on the pivot itself breaking the pivot from the bottom you may

 enter that specific stock now we see here in maruti has it broken with good volumes

 or something like that by the way this is the volume no not very amazing

 volume scene but it has respected the pivot level okay so i should be keepin a watch on tha

if you see the next day next day you can see a big green candle and this is  supported with good volumes you can see here

pivot keto it's well above the pivot point plus you can see that this r1 level resistance

 one has also been taken out  so in the first one and half hour itself the volume had

 surpassed the previous entire day's volume so that shows how big strength is seen

 in that stock  so you can see that big green candle being formed that is where

 during the day one could have taken a trade r1 broken but you can see that at r2 it

took a resistance and came down a little bit today on 23rd of june you can see that

 the stock has also broken the r2 and now it is going towards r3 okay now if

 someone would have already been

long a person may have taken partial profits here because ideally r2 generally acts

 as a strong resistance but what happens here you can see that the volumes are also

 very high even today so there's a great chance that it might

test r3 tomorrow but is this the only way just say the pivot take the position can you

 do that answer is no you have to check out macd you have to check out rsi you have

 to check out volumes and then based on the big combination of

all these things you have to decide whether to buy or whether to sell whether to

 enter whether to exit all these things

• RSI

so let's move on with our next parameter which is rsi relative strength index now

 what does this indicator tell us strength strength at which the stock can go in the

 upward direction it shows the momentum of that stock so possibility number one

 i'll say that the stock will go up

 possibility number two i'll say that the stock will go up but with good strength with

 good speed and if i want to know the second one strength speed that is indicated by rsi

•  now how to put it in trading view?

you have to just click that fx and then hit rsi that is relative strength index so

 generally what are the inbuilt parameters inbuilt parameters are 70 30 what i

 always put up is the 60 40 parameter  so i'm just taking it down to 60 40 and

then i press okay  

i'm giving you an example of asian paints this is around december it has broken the

 60 rsi  you can see 60 rsi is broken on the upward side from below now once it

has broken this is ideally where one may enter a stock again same thing just because

 rsi across the 60 are you going to enter answer is no this is one of the indicators

 correct so rsi broken 60 from below that's where

ideally one can consider entering and now see this i'm just putting this as a vertical

 bar okay just for those who want to learn about this all to v is the shortcut for this

automatically a vertical bar is drawn so this is where the 60 level was crossed it's going up 

the rsi at this candle rsi at this candle is 80.87  so it is said that above 60 the stock

 starts showing strength but once it reaches 80 now it is tired now see it has gone up

 so much it will be tired now at some point of time it has to go down right

• point to be noted

number one is once it crosses 60 it is ideally a green signal to buy once it

 is at 80 it's a warning signal stock is tired you may exit your position

and one last time is this the only indicator answer is no  i hope you have understood

 very well how to  use rsi to decide when to enter and when to exit

• INTERPRET PIVOT POINTS + RSI + VOLUME

well let's move on with last strategy i'm going to tell you this combined strategy

 wherein i want to check three parameters 

number one pivot

 number two rsi and 

number three volume 

 how can i use these three in combination to decide when to buy when to sell okay for buying let me tell you ideally what would i check number one rsi should have cross 60 number two volume should be highest in the last five trading sessions 

and number three is that i would check whether that candle has very clearly given a breakout above pivot point and it is somewhere between that pivot

to r1 so let's see if i can see the all these three conditions being met in anyone stocks

 

jubilant food works we are somewhere around this is kind of an old data this is

4th of august 2020 now which is this point this is the point when 60 has been hit so

 again i'm just drawing alt v here for vertical line this is where the 60 point has been

 crossed you can see in picture chart  now if you see here just one day before

pivot has been honored and the stock tried to go up but did not close at r1 it came

 down again so it was not above it was not able to go it was not able to close

above r1 

what happened on the next day next day the this stock itself has opened up as a gap

up and it has shown a very nice positive journey throughout the day and it has

 almost closed at the highest point almost right now let's see what has happened

 with the volume candle now you can see that this is the volume candle in picture 

and it is way above all these previous candles generally has checked only last five

 candles this is like last what 15 20 candles whatever i can see on the screen one may

 say out of those this candle is the highest so three all three criteria number one

criteria is  rs i went above 60 number two it is going strong it has already gone above p1 and it is

already testing r1 and number three volumes are very high now ideally if you

 remember i told you r2 can be a question point so immediate next day was a

 caution point for me but now i'm going to combine it with  volumes are also

going very strong on day two also you can see that rsi is still above 60. you

 remember i said that the stock will go up and up and up and up but it will be tired

 at some point in time what is that some point in time when rsi is about to touch

80. so if you see here at this very point it has touched 80 okay i'm drawing a

horizontal line this is the eight take a line and which one is this day again  put a

 vertical line this vertical line you can see this was the highest point again seven

 percent move in a single day  ideally this is where we should stop because from

 here if you can see again the stock is slowly and steadily the rsi is going below the

 80 level and eventually it has gone even below 60 level  does this mean that the

 stock compulsory must show downward journey no can you miss out on the

 probable profit answer is yes shall i show you what happened

the downward journey did not start and this is what was the highest point after

 which a downfall started so please understand with technical analysis are you going

 to get all trades correct no but is your probability of winning going to increase

answer is yes i hope you have understood how the combination of rsi volume

and pivot can be used together to gain more confidence while entering or exiting a

 specific position

                                    CONCLUSION

Using these strategy you can invest more and more and get a profitable return 

i recommend you to use  INTERPRET PIVOT POINTS + RSI + VOLUME strategy all you

 need to focus on all strategy at a time if you have any query just comment down or you can

 

contact us