Indicators can help us in trading decisions when used correctly
The problem with most indicators is New traders think that indicators are magic indicators
In Todays tutorial , i shall tell how to use the indicator and why i had purchased Sunpharma @ 107 as told in my previous tutorial (link below)
Now coming to my first indicator
1) rsi - rsi in general if above 70 is over bought and below 30 is over-sold . But only using this rule will not make it profiatble
you have to make other conditions which make the buy set up profitable. what are those conditions
other conditions which made it profitable are
1) you can see that it is at a support on daily chart as seen by the blue horizontal line 2) Hidden bullish divergence
What is my 2nd Indicator ?
1) Average true range - you have to use ATR for the stop loss . ATR is commonly used as a trailing stop loss. At the time of the trade, look at the current ATR reading. Place a stop loss at a multiple of the ATR. Two is common multiple, meaning you place a stop loss at 2 x ATR below the entry price if buying. here in the chart atr is 4 so 2*4 is 8 , so we keep the stop loss @ 400 and then take the buy entry @ 408 Now the stock has moved towards 417 and the atr is @ 3.5 , so the stop loss is moved to 410 (Trailing stop loss)
However if the stock moved towards 424 , its good to exit the stock , because that is a resistance on a daily chart
I shall follow up on this stock
Hope you understood about the 2 indicators
Please do click the the like button - if you liked this tutorial
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