15 Powerful Visuals About Psychology & Life

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4 simple #rules to find #great #stocks

1. Look for great companies making great products.

2. Require strong profit & sales growth.

3. Company must have a huge future growth potential.

4. Make sure the stock is in an uptrend & under accumulation.

4 key ingredients of #trading #success

1. Have a backtested trading system with a positive expectancy

2. Be a good risk manager to survice every market.

3. Work on your mindset to improve the execution of your system.

4. Ignore what other people are doing as much as possible.

In the long run, equity investors will do fine:

3 Common chart patterns guide 🧵

With examples

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1) Cup & handle pattern : As name suggest it looks like a cup & handle. The cup is formed as stock corrects & then starts picking up again.

Handle formation is good process as it then digests the run leading to more sustained move. The specifics of cup above (1/n)

Note - The usual depth of a good cup is max 35% but if the market is coming out of deeper correction. Then the depth of cup can be 50-55% too. But in a bull market a correction more than 35% can result in faulty pattern with lots of overhead supply ..Examples below (2/n)

Examples - Deepak Nitrite, Dixon tech

TD Power System - Recent one ( Note the handle depth here is 19% . As compared to textbook handle this is more. I see upto 20% handles working) (3/n)

2) VCP - Typically volatility contraction is not a pattern but a characteristics of any pattern. You see deep handles >15/20% - you can say that its not a cup & handle ideally but a VCP which is also fine & will work. Reduced volatility is what traders want to move ahead (4/n)

5 rules that can secure your #trading life:

1) Cut losses at 7%
2) Risk not more than 1% of your capital
3) Never ever average down
4) Trade small in biotech stocks
5) Limit your overall portfolio risk

What else?

JESSE LIVERMORE is considered the greatest trader of all time.

He was the richest person in the world during his time.

I've read majority of his books and picked out learnings which are relevant even today with examples of the current scenario.

1: Remember that stocks are never too high for you to begin buying or too low to begin selling.

This principle still holds true today in trading, especially trend following.

Most people think if a stock has run up too much, then it's price is high and it will reverse.

But a trader should always be on the right side of a trend.

For eg: Asianpaints has been making new highs constantly, the major money would've been by the people who were on the right side of the trend i.e long.

Never buy it just because it has fallen too much. Instead short it and make money.

2: “Being a little late in a trade is insurance that your opinion is correct.”

It's okay to enter in a trade after you have received confirmation from the market.

Trading after confirmation will make your sacrifice your profits but it will also protect you against the loss