Time and tide wait for no man. Neither does your window of opportunity to place that winning buy order. The time you put into trading might well make the difference to make you successful trader. A profitable trader’s day does not begin at 9:15 AM and end at 3:30 PM.
Eminent traders around the world attribute their success to the time they spend on analysing their trades pre and post market hours. In the start of your trading career, it is imperative that you hone your analytical skills. You need to spend time on refining your strategy by applying your indicators to different stocks and calculating your profit or loss depending on your entry and exit rules.
Now that we’ve established that spending quality time on technical analysis is crucial for success, what should you be spending your time on? Apart from the 6 hours and 15 minutes of the market hour, you should divide your time doing the following things:
Pre Market Hours:
- Select stocks for the day (Do not choose more than 3-4 stocks per day)
- Fix chart settings and indicators
- Calculate entry, exit and stop loss for the selected stocks
- Go over the important global and business news for the day
Post Market Hours:
- Analysing your returns and losses
- Tweak your strategy for better buy/sell entries
- Backtest your modified strategy
- Select stocks for the next day based on your strategy or news
Even the simplest of strategies can yield different results for different sectors like IT and infrastructure. What works for the Nifty 50 chart will not work for the Bank Nifty chart if you are trading indices. You will have to put in the time to get to the bottom of each stock and analyse how each one reacts to breakouts or breaking news. It will take time for you to tweak your strategies and optimise it for maximum results.
When companies listed on the exchanges announce their quarterly results, you can see intraday breakouts on either the positive of negative side. As a trader, you have make sure that you enter and ride the trend at the correct time.
Intraday screeners can make stock filtering easier for you, depending on the rules you have for selecting stocks. But your trade has to be backed by proper technical analysis to increase its probability of success. Technical analysis can be exhausting and overwhelming for the beginners. But with proper training and an eye for detail, it can be mastered.
So, what are we getting at?
Technical analysis should be the basis of all your trading decisions. It is demanding and tricky but once you get the hang of it, you can dramatically increase your win percentage. So, put in the time to understand all the aspects of technical analysis like chart patterns, indicators and the movement of stocks in different time frames.
The market has no obligation to obey you and that is why sometimes, even the most profitable traders will have their trade going the opposite way. And those profitable traders spend more than 12 hours a day sharpening their strategies. So, if you start out by trading on instincts you’ll find yourself making mistakes that could’ve been avoided by doing technical analysis.
Trading is an art and like any art form, it requires time, dedication and hard work to become perfect at it. Protect your hard earned money and commit yourself to learning the ways of the market. You will not regret it and you might uncover that knowledge that can provide you with an earning that will supplement your income. Once you master technical analysis and have the discipline to stick to your strategy, your chances of making consistent profits can increase.