How to aim for Profits in Share Market

"Get assured Profit" is a phrase that is as misguiding as it gets. For beginners in Share Market this might sound quite alluring but the truth is you have to be informed and educated on Share Market before you step into it.

But is that all?

If one has all the knowledge of the share market but lacks certain disciplines, it might get quite difficult for them to make and hold on to profits.

For the beginners in Share Market, both men and women, implementation of certain disciplines like patience, courage, confidence, self control and controlling emotions like greed, fear of market, lack of confidence reduces the margin of error and the chances of profitable trade can be multiplied.

For women who are willing to start their venture in share market, the pre mentioned disciplines are very important to understand and abide by.

One such website www.dynamiclevels.com is so designed to make trading decisions easier. Therefore each woman can be her own boss. Dynamic Levels believes in empowering women by helping to take their own trading decisions.

What are the principles of Share Market?

With 16 years of experience in share market, Dynamic Levels have come to the conclusion that the principles discussed below can be the magic "mantra" of disciplined and profitable trades. We need to adhere to these disciplines to become a pro in trading.

What exactly do we mean by principles?

Principle, as the name suggests, stands for a fundamental truth or proposition that serves as the foundation for a system of belief or behavior or for a chain of reasoning.

Principles of Share Market

• Technical Gap
• Correlation
• Fundamental Data
• Investment Climate

With time we will gradually get into the definition and use of all these principles which will make your trading decisions easier and logical.

The purpose of this column is to help new investors with their trading decisions. With approximately 1700 stocks (both Cash and Futures) in NSE (National Stock Exchange) itself, it gets really confusing to select the stock and even more difficult to select a right entry point.

Couple of questions that often lurk in the mind of a new investor are-"What stock should I invest in?" and "How to determine the right entry, exit and stop?"

Well, there is no manual for these questions. However, at Dynamic Levels, we encourage traders to take their own trades with a proper analysis of the market and the stock you are interested in. The website aims to empower new and experienced traders to take proper decisions and minimize the margin of loss.

So, what kind of analysis can lead to a profitable call!

At Dynamic Levels we try to obtain the right combination of Fundamental and Technical Analysis! While Fundamental Analysis include facts like Ratio Analysis, Quarterly and Annual Results, Corporate Actions, Share Holding Pattern and a lot more; Technical Analysis is the study of historical price movement pattern of any instrument or stock.

Let’s take a tour of Technical Analysis to understand it better.

Here in this article we will come across an abbreviation ADM. ADM or Average Daily Movement as the name suggests means the difference between the intraday high and the intraday low of any stock calculated over a period of one year.

Right Entry: For a new investor Right Entry it is often a big challenge. At Dynamic Levels we believe that when a stock is at a major support level (Weekly or even better Monthly), it is the right time to take a buy call. Why so? This is because in 80% of cases a major support level has seen a reversal in the movement of the direction of the stock, whereas, in only 20% cases we might witness a breakout and the stock can run further down.

Profit Exit: A strong resistance level which is around 1 ADM (Average Daily Movement) above the buying price is the right place to set your profit exit. Here too, the concept of 80%-20% will apply. In 80% of cases the price will turn around and start moving down from the Resistance level and in only 20% cases it will give a breakout. This is where greed control will come into action. If a trader gets greedy and waits for the market to give a breakout, he might miss upon the opportunity of Profit Booking at the resistance and might have to book at a lower price or even worse, at a loss.

Stop Loss: Here comes the most important yet the most ignored side of trading. Why to set a Stop Loss? We take any call with the intention of making profits but it so happens that the market might not react as per our expectations. Since the market is unpredictable, we must have a plan to protect our hard earned money and the entire fund from getting eroded. So how do we set a Stop Loss? As per our loss appetite we must select a level below our buying price. Dynamic Levels recommends a Stop loss at least.5 to 1 ADM below the buying price. This should take care of any daily volatility in the share price. This is the maximum loss that we are ready to incur in case the market crashes. If the Stop Loss gets triggered it would be the right decision to exit the trade.

In our upcoming articles we will discuss the Fundamental Data Analysis and will discuss some tips about Share Market.

A writer by day and a passionate reader by night. Writing just doesnot fill my pocket but it also fills my heart. With over 4 years experience in Stock Market, I am a full time content writer with www.dynamiclevels.com