Ever come to mind whenever you buy a stock and it starts plummeting?

This is the major problem every investor and trader is going through when it comes to the stock market/ equities. To solve this problem, we at TTA came up with an investment strategy which can be used to identify the major trend of stocks and hence you can buy them at the correct position. Let's address the question in small chunks!

Q.) Why does this scenario happen?

A.)Whenever you trade securities in the market, you are playing against highly professional players and hence they want you to buy at the wrong spot, because once your loss is the booked, it's the other party's profit. (Here the other part is professional traders/ investors). Therefore, if you want to eliminate the problem, identify where the big players or the professionals are buying a particular stock and ride it until the trend ends.

Q.) What are the correct ways to identify any particular stock?

A.) Stocks always move in a different zone. That is the demand zone where the buyers get active and the supply zone where the sellers get active. This area identification requires keen skills in price action reading of any particular stock chart. Once you get to know at what price level the volume is increasing and vice versa, you can easily identify the zones in which you have to put a buy order or sell order.

Q.) What is the maximum loss a trader should take while trading in equity?

A.) It all comes down to one thing; the value of your portfolio. That is if, for example, you are trading with a capital of rs500, 000, then only 1.5% of your capital value should be risked on one particular trade and you can take only 6 trades at a time not more than that.

Q.) Stick to your plan?

A.) Say, for example, you trade using a system of Moving Average Crossover. This kind of strategy is only profitable in trending markets. Therefore, times will come where you'll start encountering many stop losses and, hence the urge to change, strategy kicks in and you will end up gaining nothing out of dark times in the market.(Drawdown period)

Conclusion: If you keep on following above solutions, there soon time will come where you'll end up being profitable for consistent time and hence manage risk like a professional prop trader.