Common Misunderstanding of Stock Market

It’s over a year that I have been writing in this blog. I came across many people with many “FAQ”. I have been always writing articles on Technical Analysis. But this time I’m willing to share something regarding “common misunderstanding” that people are having regarding markets.

Stock market is an illusion, everyone enters will end-up in loss

It doesn’t mean that if you have made loss, then everyone will make loss. There are 100 reasons for going wrong out in market. Analysis sometime fail, but you need to have a backup plan. If your stops trigger you have look for things like what went wrong, which is the next support, dose it worth bottom fishing the stock? And so on. Let me take a small example assume that you are out to market to buy a soap/bread/biscuit or any other item such. What you will do? Hope you go out for a retail shop and buy. Isn’t it? What if you don’t get? Easy go to another shop. For this we always use a world “don’t marry your stocks”

The reason is every stock has a cycle, a phase and a trend. Everyone have to understand it then go for an investment you know you can’t sail against wind so you have to go according to the winds of market. It doesn’t mean we have to buy a stock at a high and wait for the stock to go high. This is something what most of the “Breakout traders” do. Breakout traders are professional traders they understand the breakout more than a common man.  See every breakout aren’t bullish, some are fake and the great way to understand it to check volumes during breakouts.

I see TV and made Profit/Loss

 I am a student I don’t want to fall into any controversy. Let me communicate what Larry Berman and other such traders and analyst say “SWITCH OFF THAT TV VOLUME AND TRADE” few even go to an extent saying switch off your TV. Recently I had a chance to sit a wonderful seminar held in Bangalore, speaker as Vishal Malkan . Do you know what he told? He told “I never see TV” this isn’t weird I have many people saying this even I do the same thing.  I never say PM/President rule this world I say Media rule this world with psychological gimmicks, mind control and NLP.

I am a psychology guy hold a special interest in cognitive psychology and neuro linguists, I am not matured to speak things but can only say “ It’s your money, don’t make someone to take your investment decisions”. If you take their advice don’t blame them. If you get poor marks in an exam you can’t blame your pen, isn’t it?

I want to invest so and so, what will be the return after so many years

 Believe me even god find difficult to answer it. There are few concept involved like range, current price, policy, economics etc. many media say Sensex will touch 20k/30k etc but there is some “T&C*”. The best way to do money is to buy at a low and sell at high. It is very hard to specify time.

How can I become a very good trader?

 Everyone wants to be a Rakesh Jhunjhunwala. I have seen people who are trading for show-offs. When people ask this question I normally question them asking. What you do for leaving? Many answer mobile shop, owner of petrol pump, jewellery shop, hardware shop etc . Time, emotions, analysis and capital are some key pillars of trading. And trading is a different game. Everyone can play but there are few who are good at it, like Sachin in cricket.

I am not a trader but would like to call myself an analyst. I don’t spend 24*7 out seeing market. Yet I made around 12% to 51% profit out of 10 stocks in September. You can be a investor can do handsome money.

Do you know in ancient time there used to be a percentage of farmers, a percentage of carpenters, a percentage of blacksmith etc etc. every city was balanced that time son of a carpenter will be  a carpenter.  If your family /your business is doing well. Then, why you need trading? Investment is smartly a good decision compared to trading.

“Hope this article bring some change, in you”

ALL THE BEST

Trading Triangles-Introduction

Triangles are some geometrical figures which are formed on charts. Unlike triangles having 3 point of contact, triangles in technical charts are formed when supports/resistance and tend line to meet at a single point.

Each triangle in charts comes with different shapes. Always triangles are classified under continuation pattern. The world “continuation” say that the trend is going to be same (uptrend or sideway or downtrend) and continue to follow the previous trend.

(Technical Analysis of Financial Markets by Jhon. J. Murphy, page no.129)

But, according to Edward and Magee in there book “Technical Analysis of Stock Trends 9^th Edition”... they classify triangles under Reversal (Page99).

Why are triangles formed?

Its pure psychology that, a price of a stock always moves in a trend. And a trend has two different terms those are support and resistance. Some times the supports and resistance show some unusual variations forming a triangle.

 In every triangle there is one constant either it is support/resistance and the price form uptrend/downtrend forming a triangle, opposite to the constant line. (Except in symmetrical triangle).

What are the parts of triangle?

There are many types of triangles. But, there are few things common in them.. Those are as follows:

• Support & Resistance (SAR): Every triangle has a support and resistance. The reason for these SAR helps you in many ways. Sometimes when a triangle fail to make itself a triangle. SAR plays a very important role, by showing the path of the triangles.

• Uptrend/Downtrend line: It is one of the most important parts of a triangle because it shows the behaviour of a price action. This uptrend line also play a very important role in measuring the future price action of a stock.

• Breakout Up/Down: when an uptrend line choreograph price action to break its support/resistance. The real sentiments of market play a real role and that’s the reason why we always see for a breakout. A breakout is always seen as a conformation of an uptrend/downtrend.

• Throwback/Pullback: These are only seen when there are poor bullish/bearish sentiments in market. It is also an indication of a fail-break.

• Gap: A gap is a gap in price movement of a stock. We normally see gaps during breakouts (some times even in Fail-breaks). There are various types of Gaps and the gap that we see during a breakout is a breakaway gaps.

• Cardle: most of people never consider cardle an important tool. A cardle is a place where the S/R and uptrend/downtrend line meet. It is a point of collision of two lines. But according to few, a cardle is going to help us determine it as triangle or wedge. It is also called apex/ point of interaction.

Types of Triangle

There are 3 types of triangle namely..

·          Ascending triangle

·         Descending triangle

·         Symmetrical triangle

Art of placing Targets, Stop-loss and Entry in Triangles

Ascending Triangle

Descending Triangle

To be  continued ....

What is STYLE OF LEARNING? Part-3

I was pretty busy with my schedule due to which I was unable to post anything regarding “style of learning”. As I am a voluntary student of psychology, I do learn it as a part of my study. It’s pretty interesting to hear that “we all learn” even a student in classroom or even a person working in his office or a athlete who is preparing himself for Olympic games. Everyone do learn, but in there way. In there unique way of learning called “style of learning".

Let me give some interesting fact about learning. How learning can be used in a freaky way. It’s better to start with an example right?

 You all have seen “Magic” how magicians perform some trick to which you say “how did he do, that?”  Later you find he actually played with your “attention”.

Let me show you a video

 Did you see that!!!!! Ha!! you may be calling it a gimmick/trick/illusion etc. But basically it a part of learning model.

What did he really do?

Sincerely he played with your style of learning. He used your disadvantage of “Visual learning”. He knows that your brains Major source of data is collected from your eyes. So, he distracted your eyes with some freaky moves (I think you have seen his hands when performing) where your brain understands it as “grabbing a ball” but it isn’t that. It is because of his body language. “Where he is saying you that he is gabbing that ball”

As I always say, every learning style has its own “Advantage and Disadvantage”. So, I am committed to post only advantage of style of learning. "No Black Magic"

So in my next article I will be posting “how to use and develop your, style of learning”

What is STYLE OF LEARNING? Part-2

Friends in last article I had told you about Style of learning. Know in this part, I will be explaining how to know where you belong. Hear we will be doing something called as “behavioural analysis”. Your behaviour is a reflection of your Sub-conscious mind and we will be trying to know what’s going into your mind. The analysis that we are doing is by a very famous psychologist called Fleming’s VAK Model

Hear we will be looking at some behavioural question to know yourself better from what you actually are.

Take a paper and note down answer as “Yes”, “No” and “occasionally”

Note: all the heads namely audio, visual, and kinaesthetic need to be answered separately.

  

Auditory Learning

• You read very loud, so that you can hear your voice
• You are good at grammar
• You always love to speak. But hate to right
• I enjoy songs and concentrate on lyrics in song
• I cant keep quit for long time

Visual learning

·         I am good at spelling

·         When I read I want complete silence

·         I love colours and fashion

·         I can understand graph, charts &figures.

·         I am good in understanding sign language.

Kinesthetic learning

• I can’t sit for long time. At least I start playing with my hand or shake my leg
• I don’t have good handwriting and I am not good writing long answers
• I like science lab
• I love adventure and good at sports
• I build models and experiment/play with it.

 The category which is have more “yes”, that is your “Style of learning”.

“In my next part I will be posting an article on HOW TO USE YOUR LEARNING TYPE?”

                                                                               To be continued…

What is STYLE OF LEARNING? Part-1

What is Learning?

Learning is acquiring new or modifying existing knowledge, behaviors, skills, values, or preferences and may involve synthesizing different types of information. The ability to learn is possessed by humans, animals and some machines. Progress over time tends to follow learning curves.

Every person has his own style of learning. It happens with everyone, everyone learn. It is not limited to a student. Even in an organisation we need learning, it is an endless process which will continue as long as you are alive.

Types of learning

• Auditory Learning: In this type of learning a person/student grasp from what they ear and hear it. These are the type of people who are effective in hearing and don’t give much importance what they see. In some case these types of people also finds unnecessary when your teacher write on your board. What really happen in there brain?  They copy all the sentence/world/rhythm and remember whole thing as it is. When needed they recover from the part which is situated at upper part of your ear called as “Auditory Cortex” which store, what we hear.  

• Visual Learning: The people of this category are said to prefer to sit at 1^st bench in there school days. They look at body language, what is written on board etc. These are basically “see and learn” group, who love to see and copy that image in there brain. The image you see is stored in a part called “Optical Cortex”. When you need any information you remember by an image in your brain.

• Kinesthetic  Learning: In early psychological expedition this type of learning was underestimated. Later they found the real power of Motor cortex and association cortex. I don’t want to confuse you all. It is learning by experiment where you actually feel, touch and experience. These are the things what an employee do in his early days of this job and carry on. The reason why many company ask your work experience. Actually they are not asking your work experience they are asking your kinaesthetic experience. That is how well you are connected to your job.

How brain work in learning process?

Our brain is a wonderful process machine each and every part of you brain are given there specified job and they do there job collectively. In above we have seen how our brain collects information. Know all the collected information is processed and a mental picture emerge(your brain think from the collected data you are having in your brain)  this is done by a part of our brain called “Association Cortex”

“This is my  1st part where I have described how your brain works collectively for your learning. In later parts I will be explaining you how to identify yourself? And where do you fall in these categories. This is a universal principal; it is not only applicable learning Technical Analysis, but also many things in your life. It might be your regular curriculum or something Weird what I do”

                                                             
                                                                                                            To be continued…..