Trading provides an opportunity to fulfill money-making objectives without getting stuck in the 9 to 5 loop of employment. But moving with wild guesses in trading is not what you must do. Meanwhile, it is important to know the right practices to fulfill your dream of becoming a successful trader. Moreover, you must see a stock market training institute for yourself if you want to make it your career. Remember your investment is your hard-earned money, you deserve profit. This blog discusses technical analysis to understand the best practices and to see what the pros and cons of the same are.
The first year of Trading: Crucial period for your Trading Career
The first year of trading comes with many doubts and uncertainties for new traders. This happens due to the lack of a proper trading course or knowledge and support. However, if it’s your first year of trading, don’t worry! We are here to discuss a few trading practices you should apply in your first year of trading.
Make a Trading Schedule
It may seem boring but developing and maintaining a schedule is a wholesome practice and habit of a successful trader. This practice is essentially valuable when you are new to the market. Develop a trading schedule before the trading day to read the strategy and time you will invest in the market. Keep notes of the economic calendar based on the news stocks, result declarations, and financial events. Unlike fundamental analysis, technical analysis is more based on statistical charts. It is based on trading indicators, stock history, and candlestick patterns.
How to Select the Stock?
Selection of the right stock is important in carrying on your trading voyage to the port. Follow an investment theme and stick to it firmly without flowing with emotions and making wild guesses.
Your way of selecting a stock to trade should be based on the three broad criteria that include Known Industry and Sectors, High Momentum & Market Capitalisation. For Stance, each day select a few stocks to analyze. Maintain the stock profile to see how the stock is working in the real market. This will help you quickly develop trading knowledge, helpful in the long run.
Stable Stock Brokers
Choose a broker that is right for you and compare their platform expertise in terms of how much their tools are helping you in trading. Try to avoid local brokers and clinch on to the brokers that are authentic and commercial organizations. Engage with brokers that offer authentic trading platforms having essential technical analysis and chart analysis tools.
Monitoring and Performance
In the early stage of trading and likewise in the later stages of trading, it is important to analyze and mark the performance of your stocks. Always monitor your profits and losses through your trading accounts. Ensure that the broker is charging accurate fees. Check whether you receive a contract note from your stakeholder after the completion of the trade having information about all your transactions for the day.
Turn on Alerts and Nudges
Trading is volatile and helping tools and techniques are much required in it. You must make sure your Nudges and Alerts are turned on. Nudges will help you prevent making a mistake during trading though push notifications and alerts help you know any sudden changes in price action. Accordingly, you can settle with the current price before it’s too late.
Rich Stocks or Small Stocks?
Try to avoid small stocks that do not have much trading history. especially in the earlier stages of trading in the stock market. You may be stuck in the trap of buying more stocks for less money. However, you must look for authentic stocks that have a rich stock history to make them work best on your technical parameters. If you want to try your luck with small stocks with unconvincing history or no history, you can invest a negligible amount in them that doesn’t affect you in any way. However, if you are moving with a huge amount it is not recommended.
Pros of Technical Analysis
- Technical analysis is based on mathematical modeling and statistics that make it more accurate to predict the stock flow.
- It can help you find a clear image of the stock price during the market action.
- It becomes more helpful for the day traders helping them depict the stock price through the powerful assessment.
- Technical analysis is the rule-based approach ensuring discipline in the stock market, an important habit of successful investors. If you pursue a trading course they will put more emphasis on discipline in trading.
Cons of Technical Analysis
- Historical Data Limitation: It relies on past price data, which may not predict future movements accurately.
- Pattern Dependence: It focuses heavily on patterns, which can be subjective and unreliable.
- Ignores Fundamentals: It overlooks the underlying financial and economic factors affecting an asset.
- Confirmation Bias Risk: Traders may see what they want to see, leading to biased decisions.
Conclusion
Technical analysis offers a structured approach to trading through statistical data and chart patterns, making it appealing to disciplined investors. However, it has limitations, including reliance on historical data, pattern subjectivity, neglect of fundamentals, and potential for confirmation bias. For success, combine technical analysis with solid trading practices and a thorough understanding of the market. It is recommended to go through the proper trading course before making trading your career, if you are looking for a trading course in Chandigarh you can join the desired course in The Wise Bucks which provides a range of courses to provide the best course for your new endeavor.