Home Trading Strategies How To Trade Stocks (Step By Step Guide)

How To Trade Stocks (Step By Step Guide)

How To Trade Stocks (Step By Step Guide)

okay so you have learned a lot so far right we’ve covered do you know the basics of stock trading what is a stock we talk about fundamental analysis technical analysis risk management and I know right there’s a lot to swallow at this point in time so I just want to know kind of piece the puzzles together so you can see the big picture right of what we are trying to accomplish over here so let me just do it right by showing with you a trick example where I simulate a treat example ok so let’s say this is the chart of Coca Cola let’s assume that you know Coca Cola it’s a fundamentally strong company right let’s say earnings is improving revenue is spitting analysts estimate year-on-year and you know all the good stuff is coming out of Coca Cola so that is a good piece of fundamental and there is a stopped everyone to focus on mixed thing we look at the technicals right so we look at Coca Cola and we notice that this market I think it’s in an uptrend right let me just now pull out the 200ma and see whether the price is above it so as you know right we can define the long term trend using the 200ma if the price is above the 200 ma we want to be to be a buyer if the price is below it we want to be a seller or a listener just stay in cash so in this case coca-cola is above the 200 ma and if you recall right just because the price is in an uptrend doesn’t mean we buy immediately why is that and what’s the second thing that we look for is right can you remember what’s the second thing so first thing is trend ok train we know it’s up price above 200 ma second thing is the area of value we want to buy when the price is it in a real value and in this case if you notice right prices bounced off the 200 ma once twice and now it’s here 4 at a time and not only that right if you notice from a market structure perspective this is a resistance resistance resistance resistance resistance and when the price breaks out of resistance it tends to come back and become previous resistance becomes a pot right that’s a some additional technical analysis tidbit for you you if you are unaware right whenever price breaks above resistance it tends to retest previous resistance which will become support and if price breaks below the pot right that level of support that area of support will become resistance so in this case right clearly the price is also at an area of value now the third thing entry trigger do we have an entry trigger that tells us that hey you know the buyers are stepping in right about to push price higher so if you look carefully right over here we have a bullish reversal pattern rioting is a call a piercing pattern where you can see that the bias with the candle open near the lows of the days by stepping push the price higher closing at the highs of the day almost the highs okay so this is a sign of strength from the bias so we have three things or four things are more in fundamentals are good number two trend is up number three from an area of value at number four we have a strong bullish reversal pattern telling us that you know hey buyers are in control in a price could possibly hit higher but if you recall earlier risk management is important right because you can have a profitable trading system or strategy but without proper risk management right you could still you know loose in the long run so now the question is how do you put on a trade such that if the trade saw was such that if the trade you know goes against you you only lose a fraction of your trading capital or 1% of your trading capital so how many shares of coca-cola do you buy okay so before we can answer that question right we have to ask ourselves where is our entry point right to keep things simple let’s say our entry point is at forty seven dollars and let’s say we have a stop loss at $45 so with that in mind just pull out your position sizing calculator can google it so it’s there’s a lot of free ones out there let’s say again you have a capital of $100,000 and again you’re conservative you risk 1% by price forty seven dollars stop-loss $45 so in this case you can buy 500 shares of coca-cola okay and if the price hits $45 if it hits your stop loss right you will lose a thousand dollars on the trade which is 1% of your trading account okay so you can see that over here coca-cola you can buy it forty seven dollars which is this mascara the two over here forty seven dollars change this to green and I’ll put this on in red okay red color okay so you can see over here this is my entry price right about 47 you just adjust it 47 this over here is my stop loss at 45 I’m not gonna be you know this right so you could get it right this is the entry point this is the stop loss okay so this is how you actually no kind of piece the puzzles together right from looking at you know a technicals risk management and then you know position sizing such that you don’t blow up your trading account so one aspect that I’ve not really covered as your exits where do you exit your trade so now this is a very broad topic we can you know discuss this until the cows come home right right so but generally right you want to exit your trader let’s say you’re a swing trader right where you just want to capture one swing in the market just you know that one move one move right as a swing trader what you want to do is to exit your trade right where there is potential selling pressure or where potential selling pressure could come in and push the price lower so you’re not yourself we’re on this chart right would selling pressure come in and push the price lower so if you ask me right again I like to reference the market structure I would say that this is a possible level and this one over here because this one video could possibly become previous support right that could act as resistance something that I just covered earlier and this over here just said no obvious resistance level is smack into the $50 price range so if you ask me a possible level that you want to consider taking profits could be this is your first level and this would be a second level to consider okay so this is how you can go about you know exiting your traits of course this is just one approach right as from a swing trading approach you can adopt a trend following approach as well where you try to you know write trends in the market but again it’s not within the scope of this video to cover it if you want to learn more I can point you to some relevant resource towards the end of this video but for now right for now I hope you have a good example right off how you can actually know take the knowledge that you have learned so far right and apply to your own stock trading okay so first do it on demo paper trade first all right once you’re confident right then you can take it to the life markets all right so with that said let’s move on you you


Please enter your comment!
Please enter your name here