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Importance of Support and Resistance in Stoploss Calculation

Important of Support and Resistance Levels in Calculation of Stop Loss in Trading

There are several methods for the calculation of Stop Loss values in Trading. Such as setting stop loss based on a percentage of your account, based on Support and Resistance from chart, based on price volatility, and based on time limit. Out of these more sensible way of setting Stop Loss would be to base it on Support and Resistance from chart. Before going to that let us have a look in to the support and resistance level.
The support and resistance are particular price points on a chart. Support is the price level at which more chance is to increase the price than declining. At this level demand is strong such as can expect more number of buyers. Usually support levels lie below the current market price. But sometimes it becomes very difficult to establish the correct support level from the chart. Support as its name suggest prevent price from falling further. Sometimes, price movements can be volatile and may briefly dip below the support. If the price closes 1/8 below the established support it does not seem logical to consider a support level broken. This is the reason that some traders establish support zones.
Likewise, resistance level is the price level at which more chance is to decrease the price than increasing it. At the resistance level number of sellers is more than number of buyers. Unlike support level resistance level is always above the current market price. Resistance as its name suggest prevent the price from rising further. The support often acts as a trigger to buy similarly, resistance often acts as a trigger to sell. How to identify this support and resistance level is obviously the next question. The identification process is simple and same for both support and resistance.
There are four steps to construct the support and resistance levels. They are
1. Load data points
2. At least three price action zones identification
3. Alignment of the price action zones
4. Fit a horizontal line
Step 1
In order to identify short term stop loss and resistance level load minimum 3-6 months data point. And to identify long term stop loss and target load minimum 12-18 months data points. Usually swing traders use long term support and resistance points. For day trading and BTST trading short term support and resistance level is used.
Step 2
Identification of the three price action zones such as
• The zone at which after a brief up move the price hesitated to move up
• The zone at which after a brief down move the price hesitated to move down
• Sharp reversals zones at specific price point
Step 3
The identification of same price action zones that are at the same price level. But it is very important to note that these price zones are well spaced in time. That is if the first price action zone is identified on second week on June, then it will be meaningful to identify the second price action zone at any point after 4th week on June. If the distance is more the S&R identification becomes more powerful.
Step 4
Connect the three price action zones around the same price levels with a straight horizontal line. So we get a price value. By comparing this price value with the current market price it become either resistance or support point. The support and resistance points are only indicate possible price reversals. This cannot be considering as certain. Like other tools in technical analysis, one should balance the possibility of an event occurring in terms of probability.
For a successful technical analysis the identification of support and resistance is an essential key point. You may face some difficulties to track the correct support and resistance levels. However, better awareness about support and resistance locations and their existence can greatly boost your analysis and forecasting abilities. The breakout of a resistance level is a sign of increased selling pressure and potential reversal. The breaking of support and resistance level indicates that the relationship between supply and demand has been changed. Resistance breakout means demand has gained the upper hand similarly support breakout means supply (bears) has won the battle.
How to set stop loss based on support and resistance level?
Now let us discuss how you can calculate stop loss values based on the support and resistance level. Taking chart saying stop loss is a more sensible stop loss determination way. But you might always be aware about the market. While observing the market movements you can see different varieties of price actions. One is that price stick on some certain levels not push or break beyond from that level.
For a trader it is always better to place stop loss beyond support and resistance levels. Often think that a break of support and resistance area will bring large number of traders to play the break and further push your position against you. On the other hand if those levels do break, then there may be forces that you are unaware of sudden up/down movements of the market.
It seems that the market moves up and then you decided to go for a long trade. But before you go for a long trade ask the following questions to your mind

• Where I could set my stop loss?
• What conditions would tell me when my original trade idea is invalidated?

If you take a long call then set your stop loss below support area and trend line. In this case, if the market moves into these areas which implies your trade idea was invalidated. So exit the trade and accept the loss.
Similarly in the case of a short call set your stop loss above the resistance areas and trend line.
Example: Long Crude Oil
The Crude Oil has been trending up. Price has hit the rising trend line a couple times which makes for a nice support level. You could place a long order right at the downtrend line (3650). Now, where you would you place your stop loss? Your stop loss would be placed at 3620. Notice how this is below the support area: the rising trend line. Let’s set profit targets at 3665 and 3675. The trade is triggered. The trend line holds as support and price rise.
Your first profit target is hit. The second profit target is missed by a single point but by that time, you had moved your stop loss to breakeven (where you entered long) so you lost nothing. This is an example of using support as a guide on where to place your stop instead of simply using a fixed number.

A direct stop loss displayed software is always useful for a trader

Is there any difference between Demat account and Trading account

Is there any difference between Demat Account and Trading Account?

There is hardly a question will arise in the mind of a new investor and also many other investors that, Is there any difference between the Trading account and Demat account? Before proceeding further everyone keeps in mind that trading account is the central point where the buy or sell activity takes place whereas demat account is a trading system facility.

Let’s take a look, consider you have money in your wallet. And you want to buy one packet of bread. Then you go to the shop and demand the seller one packet of bread, He provides it to you and you check the price details, and finalize your deal. Then, you take money from your wallet and give it to the seller. Here, in this example you are the trading account and your wallet is the demat account.

For online transactions in trade market, first you have to register with stock-exchange. For this, you can open an account with Brokers who trade on your behalf in the stock market. All the investment of a particular investor is listed in this account .This is the trading account. So this trading account acts as a platform for your buying or selling process. This account connects to the stock-exchange from where you can buy/sell. So as its name suggest a trading account is a trading platform where your buy/sell taking place. Whereas, demat account provides electronic share and security holding facility. Shares are bought and held in demat account while online trading and this provides easy trade to users. Actually demat account is a store room. Where you can store the investment details that one makes in shares, government securities, exchange traded funds, bonds and mutual funds. Like a bank locker, in your demat account you can keep all your valuables in electronic format.

According to SEBI act 1996, Demat account is a must for equity investors, by using demat account you can hold all your investment electronically. So that the physical securities and associated documentation can be eliminated. So the demat account reduces the paperwork and thus the entire transaction become fast. Physical copies associated with so many risk such as physical damage ,misplaced or lost ,and may get torn all these can be avoided by opening  a demat account and the dangers like  fake securities,  incomplete paperwork or  bad deliveries can also be avoided. Cost can also be reduced by using a demat account, the expenses like stamp duty, handling charges etc.

When you open a trading account first your fund transfer from your bank account to trading account and when you buy shares an equal amount of money will be deducted from your trading account also when you sell those shares an equal amount of money will be added to your account. Likewise in a demat account whenever you buy stocks that will be added to your account and when you sell stocks that will be taken away from your demat account .Actually trading account act as a link between demat account and bank account. Now a day’s banks offer 3-in-1 accounts in that account you will get all the three benefits from your broker. Account opening cost and fees will be higher than one who offers only Trading and Demat Account. However, if you are looking for convenience, then you can go for it.

Day trading strategies

Day trading strategies

According to trading system day trading or intraday means the trading happens in a day itself, both buy & sell acts in the same day.  Every one think that it is an easy game or it is the simplest segment in trading. But it is a dangerous game to those people, who are new in trading, because as beginner there are so many lessons is there to study before entering into it. Now we can go through some methods to remember.As a trader, he not only aware about the trading tips but also need to know about the latest news & events happen in share market on up to date basis. Doing your home work regularly is the essential thing that you need. Another factor is that you should always bother about the money that you wish to deposit before entering into trading. Otherwise the loss happen unfortunately to you is unpredictable. Always keep a minimum balance in your account.

Time is very important in day trading, there many sudden movements happen in day trading. So you should always aware about your market. Not select day trading as your trading segment if you not have much time to spend in a day, need full concentration in the market  because the good opportunities  happen in day trading is unpredictable. Other one is to remember is that not to trade with large amount & not trade more than one (means one buy & sell) in a day if you are fresher.  Related to NSE stock market not to select pour companies share, because of not having much asset there is a chance is there to lose our money in any time during the market movement.According to a beginner, morning time is not suitable for buy & sell, because morning movements of market are fluctuated ones, means they are unpredictable. Every time is chance is there to move oppositely.  So avoid morning signals & confirmations, select trading after one or two hours from the market movement starts.

The other important thing that we need to remember is that put a stop loss or executes order for avoiding unnecessary loss, not to select much long points as execute, only select a limited point. Then any opposite movement happens your trade executes in your order & you can achieve profit.The other reality is always needed to remember that achieving loss & profit is the part of our trading. All of them know that winning & failing is part of game. Not a common person wins all the games. It changes according to the situation or luck. This same strategy happens in trading. Not get profit or not get loss to us in all time; it may changes according to our situation & luck, so if you got loss in one time no need to worry about it surely there is a chance is there to you in next time. Only thing that need is avoid careless loss, for that we always aware about entry & exit point. 90% of loss we can reduce by this.Not to a greedy man when the market had good deviation. Try to trade with a cool and relaxed mind. Not to go with the highest points of market deviation without obeying the rules & regulations. Trade in correct point that we got all confirmations. You should always have a clear picture about your entry & exit points in trading.

RISK PER TRADE in Commodity/Share/Currency Markets

risk per trade in forex, mcx, nse

RISK PER TRADE in Commodity/Share/Currency Markets

A most important yet simple thought process that a trader can start with is learning how to determine how much equity to put into any one trade or position called risk per trade. How much to risk per trade is a concept that many novice traders fail to realize until it is way too late. They end up learning the exact wiring instructions on a regular basis to their brokerage account; the real hard cases end up remembering those instructions by heart. Once you learn and have the confidence to trade a system like technical analysis software which will help for best buy sell signal entries and exits or follow a trading plan with a set of conditions and specific rules, you still need to have an effective method for risk controls. A best technical analysis software will help you to control the risk in trading in FOREX, MCX, NSE, NCDEX, MCX SX, COMEX markets.

I would start by considering how much risk per trade I should use by looking at my overall account size, then at the market’s volatility and liquidity conditions, and then at a certain percentage of the overall account on a percentage basis. Let me show you what I mean; and when we go over various stop types and methods later in the book, you will be able to better comprehend my meaning. If a person wanting to start a day trading account begins with USD10,000 (INR 650000) and uses a 10 percent risk factor per trade based on the overall beginning equity size, if the first five trades go bad, then he or she has lost 50 percent of the overall account. Therefore, it is imperative that traders learn different techniques to protect their trading equity. Investors also need to know the number of positions with which they should start in connection to the account size and the point at which they add on to their contract lot or position size.

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  1. Use of Technical Analysis Software For Trade Success In FOREX, MCX, NSE (India)
  2. The best technical analysis and buy sell signal software for Indian stock Market
  3. What is Day Trading & How much can earn from Intra-Day Trading in MCX / NSE/ FOREX?

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Use of Technical Analysis Software For Trade Success In FOREX, MCX, NSE (India)

the best technical analysis software

During the last two decades of the 20th century, following the advent of microcomputers, participation in the financial markets such as Commodities/Share/Currency markets by individual traders has grown tremendously. Trading software has proliferated as an increasing number of traders have em- braced technical analysis methods for making trading decisions. While microcomputers have become substantially faster and trading software has likewise undergone significant improvements in speed, performance and user-friendliness, the overall success rate of traders from a profitability standpoint has not materially improved. The reason, in my opinion, is that the single-market emphasis of technical analysis has not kept pace with structural changes that have occurred in the financial markets related to the emergence of the global economy. Now, more than ever before, mass psychology and market sentiment seem to change daily, if not hourly, as market direction abruptly shifts from bullish to bearish and back again. One day a futures market or individual stock is overbought, the next day it is oversold. Today’s market darling is tomorrow’s ugly duckling. One day concerns over inflation are of paramount importance to traders, the next day the subject is practically forgotten as they move on to the next hot topic. Fears over interest rates and “hard landings” wax and wane as traders, with the attention span of hyperactive children, have difficulty maintaining their focus, discipline and perspective.

SmarTrader The Best Technical Analysis Software for Accurate Buy Sell Signals

In this 21st century these sudden shifts between greed and fear, bullishness and bearishness, optimism and pessimism, hope and resignation, seem to exist in a vacuum without rhyme or reason. Yet patterns of market behavior repeat themselves over and over again. They can be found within each market from an inter market perspective by analyzing relationships between related markets. Domestic and foreign markets now, more often than not, move in concert, driven by common financial, political and economic forces affecting the global economy. Today’s traders can no longer rely solely upon single market technical analysis methods, SmarTrader Buy Sell signal Software and Technical Analysis Software were designed for the more independent and less volatile domestic markets of 21st century.

Clearly, inter market analysis tools which can identify reoccurring patterns within individual financial markets and between related global markets afford traders a broadened trading perspective and competitive edge in today’s trading environment, which has been transformed by the mounting globalization and integration of the world’s financial markets. The rapidness of change in the global economy and the growing inter dependencies between global futures and equity markets should make this topic of utmost importance to traders who want their involvement in the financial markets to be profitable, not just a costly pastime. Since the markets are a financial version of Darwin’s survival of the fittest competition, inter market analysis tools that build and expand upon the single-market analysis methods which defined technical analysis in the 21st century demand serious attention. Here SmarTrader provides a better technical analysis software which helps a trader to trade in Commodity/Currency/Share market in confident with regular profit.

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What is Day Trading & How much can earn from Intra-Day Trading in MCX / NSE/ FOREX?

est day trading software for best buy sell signals

What is day trading exactly and how to use a day trading software?

In brief, day trading refers to trading transactions performed on financial markets such as commodities/share/currecny markets within a time-restricted period of one trading day on the market. Put most plainly, it is the buying and selling of Stocks/Commodities/Currency Markets like MCX (India), NSE (India), NCDEX (India), MCX SX (India), FOREX, COMEX (USA),

How much can earn from Intra-Day Trading in MCX / NSE/ FOREX?

What is the bottom line, then? How much can you really earn? The simple answer is that day trading can yield unlimited earning potential in context of the opportunities presented in the market during that day. That is, you can you can make as much as you can imagine, but only within the limits of what is available in terms of market opportunities. The stories of individuals making thousands of dollars, tens of thousands on the strength of a single transaction on a given day are probabilistic-ally, and in actuality, true. The first and foremost thing you need for intra-day trading success is to get a best and accurate Intra-day trading software for your trading in MCX, NSE, FOREX markets. A best intra- day trading software will give highly accurate buy sell signals with most precise exits will help each trader to make profit from day trading.

But these outcomes are dependent on not only the quality of stocks up and their availability for trading during that specific day, but also to the amount of money in your account that you may leverage to move on those transactions. You can make only what the market allows. That being said, you can make a nice living. Think of it in a similar manner to professional gambling. These earners are NOT the fly-to-Vegas-for-a-wedding-and-and-hope-to-score-big types.

These are practiced, skilled, and knowledgeable practitioners who pay taxes on their earnings. The solid performing ones make over six figures a year, but can just as likely make just enough to pay their bills. This is not unlike other occupations that require skilled professionals leveraging experience against risk—professional gambler is pretty close to day trading in the professional profile, but by this definition, farmers and fishermen are similar. Think about it, if you planted crops or raised cattle or fished for tuna, are you EVER guaranteed a good season no matter how experienced, talented, or resourceful you are? Of course not, but do you stand a BETTER chance of making a living if you have good skills? Yes. This brings us full circle to the beginning of the book when you asked yourself the tough questions of whether you were a risk taker. Obviously, you are. But, do you have the temperament? You will need your steadfast self-discipline and your sense of fierce independence because it is possible and likely probable that you will lose. And perhaps even lose big. You will make many, many, cringe-inducing, stomach-churning mistakes. But if you follow the best Intra-day trading software which guide you for perfect buy sell signal entries and exits will ease your trading and guide you to make a professional Intra-day trader.

Seasoned traders do this all the time, you will be no different. Your goal should be to break even at the beginning (even if your OVERALL goal is to make money every day. What’s the good news? Well, people make money. They make a living; they may even make more than that. But overall, market access has transformed in the age of the internet and individuals talented and willing to ride the frenetic waves of the day to day trading will find that over time, the waves do even out and the market gains in value. And those are two key words—over time. So, be patient, be brave, and rest easy in the knowledge that you have embarked on this venture not solely to make money. You have chosen to make money in a very specific manner that speaks to you, that rings true with your risk-taking, self-disciplined, fiercely independent nature. And that is an experience that cannot be given a price.

You can have a demo of best day trading software whch give the best technical analysis and guide you for best buy sell signals

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So, good luck, play hard, and make it a good day!

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