Thread by @brajbhushan1995

THREAD - 9

“Relative Strength and its advantages “

This is one topic which I have been asked many times plus this is one thing where we as a community has been working on from last few months.

So here is what You should know about RS (my opinion)

Sorry in advance for mistake

1. Relative Strength is basically the measurement of the price of any stock or any financial instrument with respect to another stock .. Most of the time, we measure this with our Index which is NIFTY..
In simple words, Divide any stock with NIFTY and it will give you an idea.

2. The biggest advantage of using Relative Strength is -
We do this to find the outperforming stocks..

When I say outperformance , I am comparing it with our Index which is NIFTY..

You should always have a outperforming stock..

Make this a rule and then see your performance .

3. It is basically a tool which is used by we (Technical Analyst ) for doing Positional Trading ..

What we assume is like- Our stock will outperform our Index in long run and we will make money automatically..

At the end, we are trying our best to beat the index..

4. Example of Outperformance -
A stock “XYZ” can only outperform NIFTY if it is ahead for most of the times..

Lets assume,
NIFTY goes up by 2% whereas our stock goes up by 4%.. This is outperformance..

If NIFTY goes down by 2% but our stock goes down by 1%, its outperformance.

5. In sideways condition, if NIFTY goes up by 4% in 20 sessions but our stock has gone up by 8%, its the outperformance..

Opposite to all the above condition is underperformance ..

You cannot make money by having underperforming stock in your portfolio. Remember this.

6. Biggest advantage of Practicing RS- It keeps you away from Noise..
You can have a better sleep..
You can do peaceful trading..
You can spend time with your friends and family..

Plus you can make some great gains in longer term.. (this is what you want and you are getting )

7. In India, there are very less people who use this concept to the core..

But I know 3 of them who are using RS and you can learn from them by their posts ..

They all have spent more than 15 years in the market..

They are-
1. @premalparekh
2. @vivbajaj
3. @gshah26

8. There is much more to this and if you spend more than 2 years to this concept with proper focus..

You trading will become beautiful..

Rest is all your choice..

Again.. There are many methods out their but this is the core concept of almost everything..

Stay safe.

End