Are you wanting to learn, how to analyze the chart? Then let us begin doing it live.
This is our first article on analyzing the chart live, and we are going to start it from here, analyzing almost every chart where unique patterns or something that incites us are discovered.
Our analysis of the chart is wholly based on technical analysis.
We will look at the chart, to know what it pretends and what it is likely to do in the future.
So why wait let us go on the ride of finding a new trade where we will get something interesting.
To let us begin we need to assign our checklist, on which we will judge the stock whether we will select it or not to analyze for our future conditions of the stock to get fulfilled.
Checklist
Below is the checklist on which we will judge whether our stock is approved or not for our further assigning on getting it to our trade or not.
Some people may have different ways of analyzing the stock, but our goal is the same to find the perfect or near the perfect to get the right one.
Here we are trying to teach the correct way of analyzing the stock to get into our trading zone.
Our checklist contains 5 vital areas on which our stocks need to pass to excite us to take our trade. They are as follows.
#1 Take any chart of your choice or if you want to get the best stock then it is better that you start with the stocks of your choice that have special candlestick patterns or anything that you understand is better.
Nonetheless, it doesn’t matter because whatever the stock may be, we will be analyzing it further on our checklist funnel to go through.
From my perspective: I choose the stock that is making an engulfing pattern and start the analyzation of that stock.
#2 Trend, finding the trend of the stock is the most important thing to go to other steps in our checklist, as it will be incomplete for anyone to go for trade without looking at the stock’s present trend.
There is a saying which says that the trend is a friend and it fits in the stock market completely without any hindrance.
From my perspective: I use the trendline and the Moving average to analyze the present trend of the stock.
#3 Indicators, now this is not so essential thing to look out for but even if we do get the help of an indicator to polish our confidence more, then it nonetheless makes us more confident.
Indicators are such things that show the calculative result of the past and display it in a smooth way to make us understand the outgoing of the chart relating to any stock.
From my perspective: I have seen most of the time the indicators give us the correct prediction of the stock but relying on it fully is not the smart thing to do.
I use indicators like RSI, and MACD to find out the overbought and oversold levels of the stock. Please keep it simple and don’t mess up the chart full of indicators, use only one and not more than two.
#4 Tools, the help of the tools in the chart makes the chart simpler and smoother to let anyone understand what the chart is telling us.
Tools like Fibonacci, line, Horizontal line, and many more are the most important ones to identify the present situation and trend of the stock.
From my perspective: I use the line tool too much because I need to find the trend and horizontal line to identify the support and resistance line.
#5 Price action. The most crucial thing is just mark it on the top of any formula, you are going to use in trading, one-handedly this will make the whole difference, even if you don’t know how to use the tools or indicators or anything.
Just look that the candles are making a single side trend which means if the stock is continuously making the higher high or the lower high, then the possibility of the stock to rise increases. And vice-versa for the stock to go downside.
From my perspective: I look for price action to make a decision on buying the stock whether to commence it or not.
What to do after the checklist is done?
Have you checked the checklist mentioned above? If yes then let us move to the next step.
After getting the checklist ready, our finding of the stocks gets completed and we can now initiate going to the stock we have chosen.
Now the AFTERMATH is that our story does not end here because it is just the beginning of the successful story of the finding of the stocks.
Nobody will tell us anything about what to do after we have the stock in which we are confident.
Now here is the thing which we need to do, let us know it by three points and they are:
- Stick to strict stop loss but on that level where the stock price will have problems to come.
- Take the profit, and don’t greed for too much, come to that level where the stock gets strong resistance, just come out before the resistance gets hit.
- If the stock is going in the direction, you thought out to be, then use the trailing stop loss method in which one increases its stop loss price based on the movement of the stock.
FAQs
Frequently asked questions based on the choice of the stock for trading.
